Global recession fears overstated in commodity markets
The market is, in our view, priced for an overly negative global growth outlook. Hence, if our global macro forecast, which implies global growth of 4% over the next two years materialises, it should support global commodity markets, not least business-cycle sensitive base metals and energy.
Global macro overview: China to support commodities
In particular, the Chinese engine should start pulling again in 2012 and join the US in driving the world economy forward. The euro area recession is likely to be short and euro growth should resume from Q2.
Energy: Prepare for a continuing tight market in 2012
We forecast that 2012 and 2013 will be characterised for the third consecutive year by declining global oil stocks.
Base metals: Chinese imports supportive
Global activity in general and Chinese growth in particular remain the key drivers in the metal markets. While our economists have recently revised down the growth outlook for China in 2012 from 8.9% to 8.5%, our outlook remains generally robust for the largest consumer of copper.
Grains: Look out for short-covering in wheat
We maintain a marginally positive view on the grains markets and think the market has now priced in the bearish latest USDA report. However, the upside is capped due to abundant inventories.
Read the Commodities Quarterly publication here (PDF)