United States - Spot market price index: All commodities

The Bridge/CRB Spot Market Price Index is a measure of price movements of 22 sensitive basic commodities whose markets are presumed to be among the first to be influenced by changes in economic conditions. As such, it serves as one early indication of impending changes in business activity.

• Measurements:
  • U.S. cents per pound
  • U.S. cents per bushel
  • U.S. cents per yard
  • U.S. dollars per hundredweight
  • U.S. dollars per tonne
  • Fixed-base index relative to 1967
  • Fixed-base index relative to 1977
• Adjustment: Not seasonally adjusted (NSA)
• Native frequencies:
  • Daily
  • Weekly
  • Monthly
• Date range:

The source writes:

The commodities used are in most cases either raw materials or products close to the initial production stage which, as a result of daily trading in fairly large volume of standardization qualities, are particularly sensitive to factors affecting current and future economic forces and conditions. Highly fabricated commodities are not included for two reasons: (1) they embody relatively large fixed costs which causes them to react less quickly to changes in market conditions; and (2) they are less important as price determinants than the more basic commodities which are used throughout the producing economy.

A spot price is a price at which a commodity is selling for immediate delivery. In the absence of a spot price, a bid or asked price may be used. Some of the prices used are nominal prices in that they are not actual transaction prices. Often they are exchange prices - a price for a completely standard commodity which eliminates the effect of minor quality changes on actual transaction price . Trade publications may use this type of price for commodities such as cocoa beans, coffee, and wool tops.

The price for print cloth is an average of the spot price and price for the most distant forward contract because it was determined that a large part of the sales of print cloth are made on a contract basis.

Groupings

The 22 commodities are combined into an "All Commodities" grouping, with two major subdivisions: Raw Industrials and Foodstuffs. Raw Industrials include burlap, copper scrap, cotton, hides, lead scrap, print cloth, rosin, rubber, steel scrap, tallow, tin, wool tops, and zinc. Foodstuffs include butter, cocoa beans, corn, cottonseed oil, hogs, lard, steers, sugar, and wheat.

The items upon which the index is based are classified further into four smaller groups: Metals, Textiles and Fibers, Livestock and Products, and Fats and Oils. However, some of the 22 commodities do not fall into one of these four groupings. For example, sugar is not included in any special group. Furthermore, the groupings are not mutually exclusive. Lard, for instance, is in both the Livestock and Products Index and in the Fats and Oils Index.

Data Sources and Collection Methods

The prices used in the index are obtained from trade publications or from other government agencies. Prices for cocoa beans, corn, steers, sugar, wheat, burlap, copper scrap, cotton, lead scrap, print cloth (spot), rubber, steel scrap, wool tops, and zinc, are of the same specification and market source as those used in the comprehensive monthly Wholesale Price Index. Prices for butter, hides, hogs, lard, rosin, tallow, and tin are either differently-specified spot prices or from different markets. Exchanges which issue spot prices have committees to make a determination of the spot for the standard commodity.

Selection of Products

The criteria for the selection of commodities were (1) wide use for further processing (basic), (2) freely traded in an open market, (3) sensitive to changing conditions significant in those markets, and (4) sufficiently homogeneous or standardized so that uniform and representative price quotations can be obtained over a period of time. Subject to these restrictions, efforts were made to include representative sensitive commodities from as large a segment of the economy as possible. Also, the influence of international markets upon the economy was taken into account by the inclusion of some key commodities (such as crude rubber and tin) which are important in international trade. Both in the sample and in the index structure, an attempt was made to prevent price movements of agricultural products from dominating the movement of the index.

Estimating Procedures

The Spot Market Index is an unweighted geometric mean of the individual commodity price relatives, i.e., of the ratios of the current prices to the base period prices. The use of the geometric mean has the advantage that the index is not dominated by extreme price movements of individual commodities. Since extremely large movements may be atypical, it was deemed better to minimize their effects, even at the expense of losing the effect of large representative changes. However, the fact that each of the commodities is unweighted in the index means that a price change for rosin, a comparatively unimportant commodity [...] such as wheat, cotton, or steel scrap.

The computation procedure involves obtaining for each commodity the ratio of its price in any given period to its price in the base period and taking the 22nd root of the product of these ratios. This product is then multiplied by 100 to obtain the index number for each period. The calculation is made by means of logarithms. The formula reduces to:

Log I k = Log P k - log P o + 44 / 22

I k = Index for a given day
P k = Price for a given day
P o = Average (geometric) price in base period
44 = Logarithmic constant which when divided by 22 equals log of 100.

Monthly average indexes are obtained according to the previous procedure, except that P k = the geometric average of the Tuesday prices (daily prices prior to 1969) over the month.

In maintaining the index over time, it may be necessary to use a statistical linking procedure so that only actual price movements are reflected in the index.

The geometric mean of n figures is the nth root of their product. Thus, the geometric mean of the numbers 1.5,2.0,and 9.0 is 3.0 (1.5*2*9=27. 3 27=3). The arithmetic mean, is 4.2.

Analysis and Presentation

Tuesday spot market indexes and prices are published each week, on the Friday following the day of reference. A summary of weekly indexes and the average for each month are published with the first weekly release of the following month. Beginning with 1950, historical indexes are shown for Tuesday of each week together with monthly averages; from July 1946 through 1949 indexes are listed for Tuesday of each week only. In addition, indexes are published for selected earlier dates: August 15, 1939, December 6, 1941, August 17, 1945, and June 28, 1946.