COMMODITIES NOW
S&P GSCI Sub-Indices (TR), Rebased at 100 on Jan 3rd
100 150 200 250 300 350 400 450
50 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Sources: Bloomberg, S&P GSCI, Dow Jones UBS
Allidina. With MS economists calling for slower growth into 2Q13, commodity demand may be challenged over the next few months. “However, supply-constrained commodities should still perform. Thus, we continue to prefer gold and corn. For corn, we believe investors fail to appreciate the magnitude of demand rationing that will be required as exportable Brazilian supplies dwindle,” according to Allidina. “At the same time, low real interest rates and concerns about growth and fiat currencies should drive gold higher where supply growth is de minimis. On oil, returning supply following a seasonal peaking of demand could soften balances near term, but risks are skewed to the upside for 2013.”
... we therefore view the current transition as a “renaissance” rather than an end ...
So despite the macro uncertainties, opportunities
remain. While there are a number of serious potential risks, “... increasing signs of improving global growth and continued strong central bank commitment to highly accommodative monetary policy, indicates that the first part of next year has the potential to be a good one for cyclical and risky assets,” according to Brooks. Commodity powerhouse Goldman Sachs –
renowned for coining terms like ‘supercycle’ and ‘BRICs’ – believe markets had entered a new phase. In Old Economy Renaissance, Goldman see a ‘renaissance’ not an end to the current cycle. “With commodity supply constraints easing, Chinese growth slowing and producer company returns normalizing, it is tempting to call an end to the commodity supercycle. However, we believe that the current developments are simply the next phase of a commodity investment cycle that began in the late 1990s that will create new opportunities; we therefore view the current transition as a
6 December 2012
“renaissance” rather than an end, says Currie. The heralds the return of demand driven
markets. As the markets move from being driven by long-term supply to being driven by near-term demand, inventory levels and current demand fundamentals will play an increasingly large role in the determination of commodity price levels, according to Goldman. “Specifically, we believe current fundamentals will remain tight for many key commodities, which is likely to support near- term prices relative to more stable long-term prices, reinforcing the backwardation in key commodity forward curves. Further, we do not believe that the sun has set on emerging market commodity demand growth, which will continue to be a key driver of global commodity demand, contributing 1.65 million b/d yoy in 2013, which is nearly the same as it did in 2010.” For crude oil, Goldman believe the global market
will remain tight in 2013 and 2014 despite more stability in the longer term. They forecast 2013 Brent to average $110 a barrel and $105 a barrel in 2014 but predict that the price differential between the global benchmarks (WTI / Brent) should narrow as transportation bottlenecks ease. Copper is forecast by Goldman to peak at $9,000/t in 2013 thanks to Chinese construction completions but to average $7,000/t. In this rosier economic picture, however, gold prices present “fewer catalysts for sharp moves to the upside” while the “downside risks will increase heading into 2013” due to the improving US growth outlook.
Not Smooth Sailing The re-election of Barack Obama sets the stage
for a tense period of negotiations with Congress over fiscal policy. The US is facing an end-2012 deadline to head off a series of tax increases and spending cuts, which, if they take place, would push the economy into recession.We can, however, assume that last minute horse trading with the
Energy Livestock PreciousMetals
Agriculture BaseMetals
2005
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96