The commodities sector has seldom had it as good in the recent past as in 2003. Barring plantation products, almost all commodities witnessed a bullish market.

For the first time ever, domestic commodity prices followed international trends. Also, the price cycles of all classes of commodities were in sync.

Significantly, the Indian commodities market saw the revival of futures trading after a gap of over half a century.

While the number of exchanges and associations undertaking futures trading rose to more than 20, the number of commodities traded on these exchanges increased to over 50.

The introduction of full-fledged futures trading in gold, silver, wheat and rice were notable milestones.

The prices of many commodities touched new highs this year. Steel prices have climbed nearly 14 per cent in the last six months, while sponge iron prices have risen 35 per cent and spot iron prices 50 per cent.

Ferro chromes prices rose 30 per cent, alumina 80 per cent, caustic soda 15-20 per cent, pulp 8 per cent and crude around 20 per cent.

Though gold has found a new role as an investment instrument globally, the domestic uptrend in prices has been steeper than in world markets.

Gold prices touched the highest-ever level of Rs 6,150 for 10 g in the domestic market. Despite considerable price-driven recycling of the yellow metal in the Indian jewellery market, new purchases have sustained the price surge.

In the case of agricultural commodities, the fear of a possible price crash in the wake of a substantial post-drought recovery in production has largely been belied.

Prices of most goods, including cotton, oilseeds and pulses, have either remained stable or moved up. Even prices of cereals, including coarse grains, did not crash despite bumper harvests.

Agricultural output, barring a few commodities, is estimated to touch new highs because of the good monsoon. Sugarcane, jute and mesta are the only exceptions.

This year, foodgrains production is expected to rise to between 218 and 220 million tonnes, with a major increases expected in wheat and coarse cereals. Rice output, however, may not rise much.

Among commercial crops, there may be a record output of cotton, oilseeds and pulses. Horticultural commodities, including fruits and vegetables, may follow the trend too.

However, livestock products have not done that well. A reduction in livestock in regions like Rajasthan, because of severe drought, is partly responsible for this. But, poultries and fisheries have performed well, leading to stable prices.

Plantation products and spices, however, failed to do as well as other commodities largely due to a lacklustre export performance. The prices of both tea and coffee tended to remain subdued despite the closure of some estates.

The production and prices of spices, too, remained erratic, and tended to stay low. In the plantation segment, only rubber prices saw a recovery, providing welcome relief to planters who had suffered heavy losses in the past few years.

Analysts are fairly confident that commodity prices will by and large stay firm next year too. However, higher prices may put pressure on the earnings of various commodity-based companies.

Manufacturers of cement, steel, aluminium, petroleum and food products and power producers may have to live with relatively lowers margins, say analysts.

They attribute the global uptrend in commodity prices partly to freight rates, which have risen two to three times in the calendar year.

Also, China's growing demand for commodities and other raw materials may be partly responsible for this, as well as an increase in ocean freight. Commodity prices are believed to have also benefited from the falling dollar.