TORONTO, Aug. 27 /CNW/ - Scotiabank's Commodity Price Index, which measures price trends in 32 of Canada's major exports, fell by 4.6 per cent month-over-month (m/m) in July, after two consecutive monthly gains. However, the All Items Index remains 3.1 per cent above the cyclical low in April, and is likely to bounce higher in coming months, with tentative signs of an economic turnaround in some G7 countries joining the recovery in China.

-   The Oil & Gas Index led commodity prices lower in July (-7.5 per cent
    m/m), with broad based declines in Alberta light and heavy crude oil,
    Canadian natural gas export prices and propane prices in Edmonton and
    Sarnia.
-   The Metal & Minerals Index also dropped by 5.2 per cent m/m in July.
    A significant downward shift in spot potash prices (FOB Vancouver)
    from US$710 to US$492.50 per tonne in July - following the lower-
    than-expected contract settlement between Russian-producer Silvinit
    and IFFCO (India's main farmers' procurement co-operative) and
    slightly lower gold and silver prices more than offset widespread
    strength in base metals (especially copper).
-   The Forest Product Index eased slightly last month (-0.3 per cent
    m/m), though the Sub-Index is in the process of bottoming.
-   The Agricultural Index also retreated by 4.2 per cent m/m in July,
    with grain prices falling alongside almost ideal growing conditions
    in the United States and prospects for the second-highest U.S. corn
    crop in history.
Alberta Oil Sands - The Case for Diversifying Export Markets to China and
'Emerging Asia'

In the report, Patricia Mohr, Vice-President, Economics and Commodity Market Specialist at Scotiabank discusses the arguments in favour of diversifying export markets for the Alberta Oil Sands to China and 'Emerging Asia'.

"Canada has the world's second largest 'proved' oil reserves at 178.1 billion barrels - second only to Saudi Arabia's 264.2 billion - 97% of which are found in the Alberta oil sands. Iran, Iraq, Kuwait and Venezuela round out the top six," says Ms. Mohr. "As such, the Alberta oil sands represent a key 'strong suit' for the Canadian economy; the development of lucrative export outlets and transportation infrastructure for this resource is key to Canada's growth prospects."

The United States is currently the world's largest consumer by far of petroleum products, with consumption totaling 19.8 million barrels per day (mb/d) in 2008. The development of new pipeline capacity to the United States has understandably been a first priority for Alberta's 'oil patch', with interest in export outlets to Asia lagging behind.

Development of two mainline pipelines are proceeding to key U.S. refining centres, despite the downturn in oil markets since mid-2008 and the deferral of some oil sands projects.