Raw materials may return more than financial assets for the first time in three years as the global economy rebounds, according to Bloomberg surveys and 2009’s most accurate commodity forecasters.

Oil, corn, gold and palladium will advance as much as 17 per cent this
year, the analysts said. The S&P GSCI Enhanced Total Return Index
of 24 commodities will gain 17.5 per cent, Goldman Sachs Group Inc.
estimates.

That will beat the 11 per cent jump in the Standard
& Poor’s 500 Index and the 2.8 per cent return on the benchmark US
10-year note, forecasts compiled by Bloomberg show.

“Demand is
growing on a global basis,” said Peter Sorrentino, who helps manage
$13.8 billion (Dh50.75 billion) at Huntington Asset Advisors in
Cincinnati and predicted the collapse in prices in 2008.

“Commodities
are a great place to be to gain exposure to the growth that’s coming
out of emerging markets,” Sorrentino added. Sorrentino’s largest
commodity holdings are in coal and natural gas.

Commodities will
keep rising after the Reuters/Jefferies CRB Index’s best year since
1979 because China is leading the world out of the first global
recession since the Second World War.

Peoples’ Bank of China
Governor Zhou Xiaochuan said last Thursday that the central bank will
keep its monetary policy “moderately loose” after the government’s $586
billion stimulus increased demand for Australia’s coal, Brazil’s iron
ore and Chile’s copper.

Expansion forecast

The 3.1 per cent
global expansion forecast by the International Monetary Fund (IMF) in
October also means demand for food will rise.

A United Nations (UN)
index of 55 food commodities advanced for four consecutive months
through November. Shortages sparked riots from Haiti to Egypt in 2008.

Commodities
are forecast to beat bonds and stocks this year as faster growth and
higher prices stoke expectations that central banks will raise interest
rates to curb inflation.

Goldman forecast last Thursday that the S&P GSCI Enhanced Total Return Index would gain 17.5 per cent in 12 months.

Source: Bloomberg

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