The recovery was mainly due to a rebound in the prices of rural commodities such as wool, sugar and barley which had been exceptionally weak in recent months, NFF and Dresdner said.

Despite the rise in November, the index was down 18.1 per cent compared with November 1997.

In Australian dollar terms, the index fell 1.4 per cent in November and 8.5 percent over the past year.

Non-rural SDR prices rose by 1.5 per cent compared with the previous month but were down by 13.4 per cent on a 12-month basis.

"The rise in the Dresdner index in November is the first monthly rise since August 1997, after which a downtrend set in," they said.

The downtrend coincided with the onset of the emerging markets crisis centred in Thailand in July 1997.

With the Australian dollarcontinuing to recover strongly from its mid-September lows, the November commodity recovery brought little joy to commodity producers, NFF and Dresdner said.

The rapid recovery of the Australian dollar/U.S. dollar exchange rate relative to commodity prices in the past two months had cut returns to local producers by five percent since early October, they said.

Price developments in November were dominated by recoveries in the prices of those commodities which had exhibited greater than normal weakness in the past 12 months.

Amongst rural commodities, sorghum prices rose on average by 13.3 per cent in the month while barley prices also exhibited strength during the month, climbing 8.3 per cent after more than halving in price in the past 12 months.

Sugar prices also recovered from recent lows with a gain of 7.2 per cent while wool also staged a minor recovery with a gain of 4.6 per cent on average over the month.

Metal prices were mixed, with most commodities struggling to consolidate the gainsrecorded in October.

Commodity prices seem likely to be relatively flat in the first half of 1999, NFF and Dresdner said. The outlook for world growth was still intricately linked to development in the US. The US Federal Reserve instigated its third cut in official interest rates in November, further boosting prospects of ongoing growth in the coming year, NFF and Dresdner said. The global outlook may brighten in the second half of the year, which would be positive for commodity markets, NFF and Dresdner said.