Photographs: Andrew Burton/Reuters
Despite recent hiccups in gold prices, if you're investing in commodities, it is still the best, safest bet, according to Morgan Stanley's commodities team led by Hussein Allidina, according to Business Insider.
Let's take a look at some commodities and see how they are expected to perform in the next two years.
Source: Business Insider
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How 14 commodities will perform in next two years
Photographs: Yahir Ceballos/Reuters
Crude oil
Projected average in 2013: $110/bbl
Projected price in 2014: N/A
Demand for crude oil isn't likely to grow much this year, just 0.9 per cent, which means that simply maintaining 2012 levels of production will be enough to keep the market in balance, and the price of oil stable.
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How 14 commodities will perform in next two years
Photographs: Umit Bektas/Reuters
Natural gas
Projected average in 2013: $3.50/mmBtu
Projected price in 2014: N/A
A relatively mild winter which resulted in reduced demands has increased the gas inventories. Prices will remain depressed through the first half of 2013, but should improve a bit later in the year.
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How 14 commodities will perform in next two years
Photographs: Fabian Bimmer/Reuters
Aluminium
Projected average in 2013: $2,300/metric tonne
Projected price in 2014: $2,300/metric tonne
High global stores of the metal combined with high production capacity means that aluminium prices will likely remain depressed.
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How 14 commodities will perform in next two years
Photographs: Handout/Reuters
Copper
Projected average in 2013: $8,600/metric tonne
Projected price in 2014: $8,200/metric tonne
Supply growth will remain constrained over the next five years. And while the demand for the metal in China has been contracting in the past, this will likely reverse as China's power infrastructure and auto market are stabilising.
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How 14 commodities will perform in next two years
Photographs: Yusuf Ahmad/Reuters
Nickel
Projected average in 2013: $18,300/metric tonne
Projected price in 2014: $19,800/metric tonne
The laggard of London Metal Exchange metals, nickel recently dropped to mid-2009 lows, due to poor demand and mounting oversupply.
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How 14 commodities will perform in next two years
Photographs: Erik de Castro/Reuters
Zinc
Projected average in 2013: $2,200/metric tonne
Projected price in 2014: $2,300/metric tonne
In 2012, the supply of zinc declined faster than consumption, thanks to a sharp drop in production in China. This an encouraging trend, as the metal has been in over supply since the financial crisis.
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How 14 commodities will perform in next two years
Photographs: Nguyen Huy Kham/Reuters
Gold
Projected average in 2013: $1,853/oz
Projected price in 2014: $1,800/oz
The third round of quantitative easing from the Fed, combined with the ECB's unlimited bond purchase programme has been good for gold prices. However, the demand for gold is unusually low, with 2012 gold sales at their lowest level in all three years of the current Central Bank Gold Agreement. This lowered demand will likely temper prices.
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How 14 commodities will perform in next two years
Photographs: Leonhard Foeger/Reuters
Silver
Projected average in 2013: $35/oz
Projected price in 2014: $35/oz
Silver could outperform gold on a relative price basis, as it has a cheaper entry point. While silver had been underperforming as investors steered to gold thanks to uncertainty over global macroeconomic policy, it started to rally when speculation over QE 3 emerged in September.
This is a trend that will likely continue, as supply and demand fundamentals remain favourable.
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How 14 commodities will perform in next two years
Photographs: Ilya Naymushin/Reuters
Platinum
Projected average in 2013: $1,715
Projected price in 2014: $1,785
South African supply issues have helped rid the market of any surplus, and industrial demand remains firm, both of which are boosting the price of this precious metal.
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How 14 commodities will perform in next two years
Photographs: China Daily/Reuters
Cotton
Projected average in 2013: 80¢/lb
Projected price in 2014: $1,785
With China purchasing more and more cotton to add to their reserves, it is likely that at least half the global stocks of the fiber will be locked up there. Morgan Stanley remains bullish on cotton, unless a global GDP slowdown lowers demand.
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How 14 commodities will perform in next two years
Photographs: Andrew Burton/Reuters
Sugar
Projected average in 2013: 19¢/lb
Projected price in 2014: 20¢/lb
A global surplus of sugar, thanks to larger-than-expected production in Brazil and healthy production in India, will likely cause prices to remain depressed for a while.
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How 14 commodities will perform in next two years
Photographs: Darren Hauck/Reuters
Corn
Projected average in 2013: $7.85/bu
Projected price in 2014: $5.90/bu
Global stores of corn remain precariously low, and US demand has not been adequately rationed, which is why Morgan Stanley is bullish on corn for the short term.
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How 14 commodities will perform in next two years
Photographs: Enrique Marcarian/Reuters
Soybean
Projected average in 2013: $15.70/bu
Projected price in 2014: $14.50/bu
Strong US demand and recent supply shortages in South America will cause Soybean prices to remain elevated and volatile.
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How 14 commodities will perform in next two years
Photographs: Enrique Marcarian/Reuters
Wheat
Projected average in 2013: $8.30/bu
Projected price in 2014: $7.30/bu
Wheat prices will remain sensitive to possible supply challenges in the US, but the fact that it's more expensive that corn will likely temper demand.
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