Salient to Investors:
Peter Richardson and Hussein Allidina at Morgan Stanley said:
- Calls for the end of the commodities super-cycle is too simplistic as commodities are cyclical but the elasticity of supply and demand and length of the cycle vary significantly.
- Gold, silver and corn will outperform other raw materials next year as a weaker dollar and rising investor demand bolster precious metals while supply curbs aid grains. Gold will average $1,853 an ounce in 2013 due to low real interest rates, buying by central banks and geopolitical uncertainty. Silver will average $35 an ounce.
- Corn and soybeans should benefit from harvest delays in South America
- Aluminum, sugar, nickel and uranium are bearish as supplies will outpace demand.
Jeffrey Currie at Goldman Sachs reiterated an overweight call on commodities, forecasting a 7 percent return in 12 months. With supply constraints easing, China slowing, and producer-company returns normalizing, Currie said it is tempting to say the super-cycle is over, but this is simply the next phase of a commodity-investment cycle that began in the late 1990s. Goldman likes crude, corn and copper, and expects gold to peak in 2013 on a recovery in the US economy.
Edward L. Morse at Citigroup believes the super-cycle has ended.