Within this general category, it is clear that energy prices have been particularly volatile. According to the same source, measured in US dollars, the coefficient of variation of energy prices was at least twice that of manufactures in each decade. The world oil market has been especially unstable over the 1990s. Peak prices during the Gulf War, price declines related to restructuring and non-OPEC supply subsequently, revival in the mid-1990s, falling prices and stock build-up combining with relatively warmer weather to produce a complete collapse. in 1998. By late 1998, many observers were predicting that energy prices would stay low for the coming decade, and within months this prediction was confounded by the Pheonix-like emergence of oil prices in 1999 to almost regain the level of the pre-collapse period.
 
Of course, oil prices are a special case because of the very different circumstances of global trade in energy, which have once again underlined the crucial role played by OPEC decisions in setting international prices in this sector. But it is worth noting that in general non-oil prices have certainly followed similar long-terms trends, and are now displaying similar (if less marked) volatility.
 
Not only has price volatility been a problem, but commodity prices have also declined relative to manufactures' prices during the past two decades. According to the World Bank, the real price indexes (nominal price indexes divided by the manufactures unit value index) of both agriculture and metals and minerals fell by about 45 percent during 1980- 98. It is now widely accepted that the decline in the ratio of the price of primary products to manufactures is statistically significant.
 
Energy prices have fallen by 76 percent in real terms since 1980 and in 1998 were less than half the level reached after the first oil price rise in 1973–74. Even with the recovery in 1999, the real energy price index likely will remain at only 55 percent of the 1974 level.
 
As is evident from Chart 2 and 3, the past two years have been especially bad for absolute levels of prices as well. After the mini-boom of 1994-96, there has been a fall in all the major commodity groups, which has been substantially related to both supply behaviour and demand changes, led for example by the east Asian crisis from mid-1997.

Chart 2 >> Click to Enlarge
 
It is clear that supply conditions have played a role in depressing commodity prices, especially for agricultural and mineral goods. Thus, total world output of agricultural goods increased by 1 per cent per annum in the period 1990-94. This increased to 2.6 per annum over 1994-98. However, world consumption of agricultural commodities is estimated to have grown at a much slower rate.
 
The decline in primary commodity prices since 1997 was in part a response to an unusually large increase in supply. The rate of growth of world production of agricultural commodities rose from 1 percent per year in 1990–94 to 2.6 percent in 1994–98, whereas world production of metals and minerals was flat in 1990–94, but increased by 3.5 percent per year in 1994–98. 6 The acceleration of consumption of primary commodities between the two periods was much less.
 
It could has been argued that increased production was in part a response to the high prices that prevailed during the brief boom of 1993–95. If that were the case, then the expectations of producers must have been sorely disappointed, for agricultural commodities saw prices fall by 4.5 per cent in 1996 then recover slightly in 1997 before dropping by more than 16 per cent in 1998. The first ten months of 1999 saw such prices continue to fall, by an average rate of 14 per cent. Declines have been particularly pronounced for crops such as wheat, maize, coffee, rubber and sugar, and in 1999 the depressive tendency also extended to cocoa prices. However, as Chart 3 shows, the downturn has been fairly general across broad categories of food, beverages and raw materials.

Chart 3 >> Click to Enlarge