At a time when U.S. equities are trading near a record and the dollar is having its best start in three years, commodities will finish this quarter little changed from where they were at the end of 2012.Fortunately trading is not unidirectional.
The Standard & Poor’s GSCI gauge of 24 raw materials will be at 644 at the end of June, 1.2 percent lower than now, according to the median of nine investor and analyst predictions compiled by Bloomberg. The index rose 0.8 percent this year, the worst start since 2003. Arabica coffee, silver and nickel will gain as cotton, crude and natural gas fall, analyst forecasts show. Investors had $132 billion tracking commodity indexes in February, Barclays Plc estimates.
Supplies of everything from copper to sugar to oil are now catching up with or exceeding demand after the S&P GSCI’s almost fourfold advance since the end of 2001 spurred new mines, wells and crop acreage. While the International Monetary Fund expects global economic growth to accelerate to 3.5 percent this year, from 3.2 percent in 2012, the Washington-based group cut its estimate three times since July. The 17-nation euro area already tumbled back into its second recession in three years.
“No one is really concerned we’re going to have any shortages,” said Bart Melek, head of commodity strategy at TD Securities Inc., the Toronto-based company ranked by Bloomberg as the most accurate forecaster on Brent oil and third-best in industrial metals over the past two years. “The big complaint is the inventories are probably a bit too high. It’s difficult for us, given the supply configurations across the commodity spectrum, to say that we’re going to see a lot of upside.”...MORE
See also:
Izabella Kaminska on Deflation
Izabella Kaminska on Mining capex
Izabella Kaminska on Hydrocarbons
Izabella Kaminska on Scarcity/abundance
Izabella Kaminska on Keynes's Leisure Society
Izabella Kaminska on...
...you get the point.
