US lumber prices have been lumbering on in a fairly choppy way since the start of the last quarter of 2011. There have been one or two slight hitches, but the latest posts look to have been hammered in -- in a reasonably positive way.

Trends in lumber are often seen as an indicator of economic growth. Nowadays, new homes being built in North America are picking up slightly, but we are a long way from the boom building days of five years ago. Since lumber is such an important part of construction, other large economies tend to rely on a healthy building industry at their heart.

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When we last covered peanuts back in September 2011 , there was a lot of concern about what was happening in the US and the rest of the world marketplace. We thought it would be good to provide an update on what has been happening. Prices for this important crop reached recent record levels in 2012 due to rising demand and poor South American harvests as a result of a prolonged drought there last year.

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Years ago, the spice trade dominated world commerce. Precious and easily moved spices often worth their weight (or more) in gold travelled the globe, from all the ends of the earth.

Lately we've been seeing similar excitement in the trade in global essences and spices. The price of Indian mint oil for example soared at the start of this year due to high demand and limited supply but is now starting to ease as the next northern crop is expected to arrive toward the middle of 2012.

It is perhaps surprising, that menthe, or mint oil, should attract such attention more reminiscent of the positions that formerly cornered the markets for precious metals, or the trade in soft commodities like coffee, cocoa, pork bellies or orange juice, but traders are now apparently stalking the new commodity markets of the emerging world after the scent of an opportunity.

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There's a good chance sharp eyes on the lookout for opportunities in commodities over the next few decades could increasingly focus on the raw materials of detergent manufacture. Some think that these are such a good potential bet because if there are lessons to be learned from previous trends in economic development, just as calorie and protein intake tends to rise with an individual's salary, so too does their purchase and use of cleaning products and detergents.

Glance at a list of ingredients for a typical cleaning product such as washing powder or liquid, however, and you might be forgiven for thinking that a degree in chemistry and a few years of Latin are actually what is required for any chance of getting a handle on what is actually going on.

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We have a nice mixed bag this week starting with nickel. Then we'll chat about the "pink slime" that's currently permeating the media before moving on to cottonseed and finally soyabeans.

Nickel
The cost of nickel is reported to have fallen due to poor demand and good supply. Growths in nickel inventories on the LME have been occurring since the start of November 2011. There are also reports of an unexpected fall in consumer confidence in the US and concerns over new signs of a fall in Chinese demand for nickel-rich (austenitic) stainless steel. China currently uses about 25% of all the mined nickel produced each year, but the growth in its use of nickel is going at a much slower pace than was previously anticipated. Meanwhile, the mined output of nickel has continued to grow, with further large additions to production particularly in Canada, Brazil and the Philippines expected to occur in 2012.

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Having spent three of the past five weeks in North America, I have noticed a number of subtle differences between the US and Europe. Interestingly enough, the differences aren't just culturally based -- they're also commodity market based. The pulp and paper market is a prime example.

Pulp used for kraft
Strong packaging paper is made from brown unbleached or bleached kraft pulp. Kraft pulp is produced through a chemical-based sulfate process. The long cellulose fibres from softwoods such as spruce, pine, fir and cedar are predominantly used for pulp where strength is a requirement, such as in packaging papers. Hardwoods such as birch and aspen are also used.

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Crude oil normally affects the price of most commodity markets globally: the cost of oil goes up, the cost of production increases, packaging material prices strengthen and then the cost of delivering your goods goes up. This week it is worth exploring something that is topical and has been affected by our desire for oil in a different way: Guar gum.

What is guar gum?
Guar gum is a white to yellowish-white powder extracted from the guar seed. It is used as an emulsifier, thickener, and stabilizer in a wide range of foods, cosmetics, and pharmaceuticals. In the food industry it completes with a number of other gums, for example, xanthan gum and locust bean gum. Guar gum typically is used at 0.3% in applications. Use may vary depending on the application, but it may be as high as 1% and as low as 0.1%.

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Aside from the underlying development of an infrastructure to drive commodity management visibility as part of sourcing and supply chain programs, Spend Matters and MetalMiner recommend placing similar emphasis on understanding the universe of potential hedging vehicles for the specific commodity categories that can impact price volatility within a specific P&L. However, companies should not discount the importance of putting the right fundamental commodity management technologies and information sources in place before embarking on specific hedging strategies.

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