Commodities Outlook for 2014

Commodities are unlikely to find any friends in 2014, with the exception of the ever-resilient gold 'bugs'

Andy Brunner 12 December, 2013 | 2:46PM

Are there any signs of improvement for 2014?

Following another difficult year of sizeable losses, the commodity sector remains virtually friendless going into 2014. Oversupply has become an increasingly serious issue for a number of commodities, especially industrial metals and, for the two main metals, aluminium and copper, this is expected to undermine pricing through 2014. The average year-end copper price forecast from the main investment houses we monitor is $6,750/tonne, some 5% below current spot price.

In the oil markets, ever increasing North America oil production is beginning to have a global supply effect as the shale revolution continues, while geopolitical risks have eased in Iran and Iraq and Libya is raising production even as emerging market demand has downshifted. Forecasts for both Brent crude and WTI suggest a relatively flat/slightly lower outcome for 2014 but risks appear to the downside.

In agriculture, following a good harvest this year and higher plantings expected in 2014, further price weakness seems likely for grains. Forecasts from the main investment houses indicate corn prices will fall again in 2014, although much will depend on the vagaries of the weather.

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About Author

Andy Brunner

Andy Brunner  is Head of Investment Strategy, Morningstar UK

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