When you are broke, there are two things you can do; limit consumption to only essential goods or consume less. Generally speaking, the same applies on a much larger scale. The fall in prices of commodities can be attributed to a decrease in consumption due to many countries being broke. While this might be bad news for exporters of commodities, this can generally be seen as good news for many people across the world who have been dealing with high prices for anything from food to construction materials.

The past month has been a particularly rough time for commodities with prices falling across the board. Crude oil declined by 12 percent while soft commodities such as corn, cocoa and coffee have declined by around 5 percent. Prices of other commodities like cotton are around 20 percent lower than for the same period last year. Large investors have also started selling off their investments in commodities, preferring safer options such as U.S Treasury Bills instead. During May alone, investors took almost $3 billion from American commodity exchanges in favor of safer investment options.

Despite continuing tensions in the middle-east, Crude oil prices have been falling. Other than reduced demand, other factors have also contributed to a supply side easing. Most notably, Iraq and Libya have been able to increase production, and Saudi Arabia, the largest producer of Crude Oil, has done the same. The fall in commodity prices are expected to continue. Even at this stage, commodity prices are higher than they were before the pre-boom days of 2007. Although it is not very likely that prices will fall to those levels again, a fall in prices will certainly continue until major economies, both advanced and emerging, pick up production levels and the fall in prices are translated as benefits for the consumers in these countries who will then start buying more.