Outlooks for commodity sectors in 2022

Commodities outperformed other assets this year and are due to remain competitive in 2022.

Below are analysts’ outlooks on various commodity sectors for next year.

ENERGY
CREDIT SUISSE “We expect oil prices to stay supported, as demand has further room to catch up, but supply competition could increase as more non-OPEC volumes return. Hence, spot prices may moderate somewhat as 2022 progresses, with performance mostly driven by roll yields.”

KOEN STRAETMANS, NN INVESTMENT PARTNERS – OIL
“In the short term, the next couple of months, there’s still some undersupply, so we’re still positive on oil prices over the winter months. Going into next year, I anticipate quite a supply response… so the market will shift in principle to a surplus.”

PRECIOUS METALS
JP MORGAN “Our forecast for significantly higher U.S. real yields by the end of 2022 drives our bearishness on gold and silver prices over the next year… we see gold prices steadily declining over the course of next year to a 4Q22 average of $1,520/oz.”

Spot gold was trading at $1,797 an ounce on Monday.

UBS “Precious metals continue to face cross currents – the effects of recent hawkish comments from Fed Chair Jerome Powell have been offset to some degree by expectations for U.S. inflation surprises and the equity market volatility caused by Omicron. Hence, we believe a neutral position is appropriate for now until more clarity emerges.”

INDUSTRIAL METALS
CITI “We remain very bullish back-end aluminium prices and see around 40-50% upside over the next three years in our base case. Aluminium supply will likely be constrained by decarbonisation and thus aluminium is highly leveraged to global growth.”

MORGAN STANLEY
“Copper is likely to remain volatile and vulnerable to macro moves, with low inventories and relatively light positioning, while new rules in Malaysia are tightening scrap markets. We see a downside to prices from 2H22 as supply grows faster than demand, tipping the balance into surplus.”

AGRICULTURE
ING “CBOT wheat has traded to the highest levels since 2012 as expectations for 2021/22 global ending stocks have been consistently lowered through the year. However, supply should improve going into the next season which should see prices edge lower.” UBS “The outlook is becoming more complicated for agricultural commodities as La Nina intensity picks up and with bottlenecks in crop inputs likely to persist into the first half of 2022. With fundamentals tight across key grains and soft commodities, recent setbacks are an opportunity to a more positive view in the sector.”

Source: Reuters

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