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Here's something unexpected: commodity prices have actually been rising, at least according to Bank of Nova Scotia's monthly commodity price index.

The index rose in March by 1.6 per cent over February and inched up slightly in the first quarter as a whole.

"Firmer overall prices in March – likely a surprise to financial markets – were led by the oil and gas index (+6.8 per cent month over month)," Scotiabank said.

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In the plus column were Western Canadian heavy oil, natural gas export prices to the U.S., and propane prices, and for non-energy commodities, forest and agricultural products.

The rise is unexpected because most investors have been fretting over the huge drop in gold earlier this month as a harbinger of trouble for the commodity sector. That drop wasn't captured in the bank's index, but will show up next month.

However, the bank says some commodities will be strong in the current quarter, pointing to premium grade hard coking coal, which is used in the steel industry. The recently negotiated price between BHP and Japanese buyers increased $7 U.S. to $172 per tonne. "This points to firm prices in the second quarter for Western Canada's hard coking coal at Vancouver bound for North Asian markets," the bank says.

The bank's index has slumped from its 2011 peak by about 15.7 per cent, although recently the downward trend seems to have stalled out and prices have stabilized.

With its large bullion sales operation, Scotiabank is the major Canadian financial institution most in tune with commodity prices. It isn't buying the idea that the long-term uptrend in commodity prices, the so called "super-cycle," is over, at least when it comes to important industrial metals The bank believes base metals will be weak short term, but the downturn won't last.

Market conditions for copper and nickel "are likely to be lacklustre in the next several years, as new mine supply comes on stream. However, the 'super-cycle' in base metals will return in the second half of the decade, with zinc the next big base metal play."

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