Figure 7.2 shows the Spot Foodstuffs and the Spot Raw Industrials Indexes from 1985 through 1989. The 23 commodities that are included in these two indexes are combined in the CRB Spot Index. An examination of the Raw Industrials and the Foodstuffs helps explain the riddle as to why the CRB Spot and the CRB Futures Indexes diverged so dramatically in late 1988 through the end of 1989. It also explains why the Journal of Commerce Index, which is composed exclusively of industrial prices, gave entirely different readings than the CRB Futures Price Index.
In the summer of 1986, Raw Industrials turned higher and led the upturn in the Foodstuffs by half a year. Both indexes trended upward together until mid-1988 when the Foodstuffs (and the CRB Futures Index) peaked and began a yearlong descent. The Raw Industrials rose into the spring of 1989 before rolling over to the downside. The Raw Industrials led at the 1986 bottom, while the Foodstuffs led at the 1988 peak.
METALS: TEXTILES: PETROLEUM: MISC:
aluminum, copper scrap, lead, steel scrap, tin, zinc burlap, cotton, polyester, print cloth crude oil, benzene hides, rubber, tallow, plywood, red oak, old corrugated boxes
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