In the past, commodity prices have shown a tendency to move in response to the trade cycle in industrial countries. Supply shocks arc of importance to individual commodities, but they can be expected to occur randomly, so that they tend to cancel each other out in any index of commodity prices as a whole. If we consider such an index, and leave to one side the issue of long-term trends in the terms of trade, the fluctuations around the trend can reasonably be expected to have much to do with changes in demand in the industrial countries.