Bank of Montreal economists said Friday that their commodity price index rose 32.8% last year but “the current strong momentum in the overall index is not expected to be sustained through 2006.”

The index of Canada’s commodity exports was powered by oil and gas, whose prices last month were 64.9% above December 2004.

Metals and minerals followed with a 21% year-over-year price gain, but prices for forest and farm products barely moved.

For the year as a whole, oil and gas prices averaged 40% above the 2004 full-year average, pulling the annual average for all commodities 19% above 2004.

“The commodity rally that started in mid-2002 remained in full swing in 2005, defying earlier expectations it would slow down,” commented Earl Sweet, assistant chief economist at BMO Financial Group.

“Elevated prices should work to slow demand growth and spur increases in production, together easing market tightness,” the BMO report said.

“However, performance amongst commodities is likely to be mixed,” as it was in 2005, when forest products edged up only 1.8% year-over-year and the prices of agricultural exports advanced a bare 0.9%.

“Looking forward, a projected slowing in housing construction in North America is expected to keep wood product prices on a downward course in 2006,” said Sweet.

“Pulp and paper prices are likely to hold up relatively better, although falling U.S. consumption of newsprint will require capacity reductions.”

For wheat, canola, corn and soybeans, “low global stocks relative to consumption have provided support to prices,” Sweet added.

“Agricultural prices are expected to ease during the next year although comparatively low global inventories of key commodities should provide some support.”