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A giant bucket goes in for another load of iron ore inside the laker CWB Marquis which off loads it’s cargo of 29,000 metric tonnes of iron ore pellets at the ArcelorMittal steel†plant, in Hamilton. Iron ore has tumbled by 70 per cent since the first quarter of 2011. However, iron ore and crude oil, in particular, have surged in recent weeks.Glenn Lowson/The Globe and Mail

The end of the global commodity supercycle has wreaked havoc on Canadian markets.

Though the collapse in crude oil has received the most attention, and deservedly so, it's far from the only raw material that has been under pressure.

Copper, often cited as a barometer for the health of the global economy, has declined by 40 per cent since the first quarter of 2011.

Iron ore has fared even worse, tumbling by 70 per cent over the same period.

In March, Scotiabank's Commodity Price Index dropped to its lowest level since January, 2007, and is down by one-third on an annual basis, though price action this month promises an improvement in the next reading.

"A spring rally has emerged in April, with price gains for oil and base metals," said Patricia Mohr, vice-president and commodity market specialist at Scotiabank.

Iron ore and crude oil, in particular, have surged in recent weeks. BHP Billiton said that it was delaying the expansion of an iron ore project, which would not have made a major impact on the global market but nonetheless signalled this low-cost producer's desire to avoid adding to the supply glut in a period of low prices. Meanwhile, signs of a plateau in U.S. production and the tumbling count of active rigs have fuelled a pickup in crude prices.

"The CRB commodity price index has gingerly poked its nose above the 100-day trend-line for the first time in 10 months," wrote David Rosenberg, chief economist and strategist at Gluskin Sheff + Associates.

However, this countertrend rally in select commodities may not be as enduring as some investors hope.

"The party's over, and now we're dealing with the hangover," said CIBC World Markets economists Nick Exarhos and Andrew Grantham in a report.

Sluggish global growth amid a buildup in supply has weighed on the values of hard assets; a slowdown in the rate of China's expansion is likely to exacerbate this issue for many commodities.

Despite this, CIBC's duo believes select commodities should still have a place in investors' portfolios. Lumber and oil are their two favourite picks for the year ahead.

Demand for lumber should pick up as the U.S. housing market continues to heal, they reason. And assuming production from OPEC remains steady at a little more than 30 million barrels a day, CIBC World Markets sees the oil market returning to balance in the second half of 2015 as U.S. production is curtailed and demand continues to grow.

In addition, unlike many metals, these commodities tend not to be highly correlated with others – that is to say, they often dance to the beat of their own drummers.

But the upside for oil prices is limited, with the economists calling for a long-term ceiling of about $75 (U.S.) a barrel.

"While lower supply will alleviate the pressure placed on some prices (for example, oil), a slow global growth environment going forward will ensure that any after-party in commodity prices doesn't live up to the hype of 2007 or even 2011," said Mr. Exarhos and Mr. Grantham.

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