After losing ground in May, Bank of Nova Scotia’s Commodity Price Index, which measures price trends in 32 of Canada’s major exports, rebounded in June, posting a 1.1% month-over-month gain.

The All Items Index is currently 9.3% above a year ago, though the level remains slightly below the record set last April.

The Oil and Gas Index led the way in June, as Edmonton light crude oil prices reached a new record high, and more than offsetting a temporary dip in Canadian natural gas export prices.

“The key question for oil markets and investors now is – how big will the supply response be to today’s near-record oil prices? World drilling activity and surveys of ‘upstream’ capital spending by private-sector oil and gas producers indicate that activity has picked up substantially in 2004 and 2005,” said Patricia Mohr, vo and commodities specialist, Scotia Economics. “However, judging from re-investment rates, the pick-up from the very low levels of the mid and late 1990s has so far been more modest than would have been expected from the huge increase in corporate cash flow. Major oil companies have only modestly stepped up their exploration spending and limited equipment and personnel have restrained global drilling activity (especially in deepwater). This points to a period of ‘sustained’ high oil prices – at least through 2006.”

The Metal and Mineral Index strengthened, as LME copper prices jumped to a new record amid very tight global supplies, uranium prices continued to climb and precious metals rebounded from recent weakness.

The Agricultural Index posted a strong gain, with wheat prices advancing and coarse grain & canola prices supported by drought in parts of the United States and Brazil.

The Forest Product Index was the only sub-component to decline in June, as lower pulp and uncoated freesheet paper offset a small gain in newsprint, lumber and OSB prices.