Tighter market balances suggest that current price levels for most commodities are not solely fuelled by quantitative easing. We see most commodity prices edge higher in 2011.
Oil shows strength as inventories drop. Forecast path revised higher as we now see USD91 on average in 2011. USD80 provides a new floor for prices in the near term.
Metals face tighter market balances. We maintain our call for copper to outperform aluminium. Physically-backed ETFs remain a joker.
Soybeans join wheat and corn in seeing weather-related production shortfalls but new global food crisis still not imminent.
In our view, the recent setback in metals prices offer good price levels from a buying perspective. In the near term, soft equity markets and/or a Chinese rate hike may also offer consumers opportunities to lock in prices.
Commodities Monthly: Fundamentals
rule despite boost from QE