Commodities still well shy of the 2006 correction

For all the gnashing of teeth amongst commodity bulls, there is one important point that has been routinely ignored by nearly everyone with an opinion on this matter.
The current bloodbath in the natural resource sector, though alarming in its suddenness and severity, is still well shy of the 2006 correction, a period when many naysayers were also heralding the bursting of what has turned out to be quite a pesky bubble.

Based on the CRB Index shown above, the May to October move down in 2006 - from 366 to 293 - works out to a 19.9 percent decline.

The plunge from early July to this morning - from 473 to 393 - totals only 16.9 percent.

That's not to say that the CRB won't go even lower from its current levels, momentum is now clearly working against it, but it's not as if a decline of the current magnitude is unprecedented - it happened just two years ago.