Economic and market data indicates that most commodity markets, with the exception of agricultural prices, remain on a firm recovery path. As the global economy gains strength over the next two years, it is anticipated that commodity prices will continue to rally.

Crude oil prices rebounded in early 1999 as major producers reached agreement on a new round of production cuts aimed at reducing the world supply glut. Recently, the price of WTI Oil has exceeded US$30 per barrel and forecasters expect prices will average about US$25 per barrel in 2000 and US$23 per barrel in 2001.

Natural gas prices have surged across North America and the U.S. has become increasingly dependent on Canadian natural gas. With the opening of the Northern Border and TransCanada pipelines in 1999 and the Alliance pipeline in 2000, Alberta's export capacity to the U.S. will increase substantially. Western Canada oil and gas drilling activity is expected to climb significantly in 2000, with natural gas activity reaching its highest level in twenty years. The Canadian Association of Oilwell Drilling Contractors anticipates a 40% increase in drilling activity in 2000 as Canadian producers search for natural gas to fill the expanded pipeline capacity to the U.S.

Prospects appear bright for pulp prices over the next several years with significantly tighter world market conditions in 2000 to 2002 along with sustained demand from Europe and a recovery in Asia. Declining residential construction activity in the U.S. is expected to weakendemand for Canadian softwood lumber and panel boards during 2000/2001.

In 1999, Alberta farm cash receipts rose 2.8%, compared with 1998. However, the agricultural sector can expect another year of relatively poor returns, the result of weak grain and oil seed prices. There is risk that soft agricultural prices will persist this year. Thereafter, prices are expected to drift higher, largely on strengthening wheat prices.