(Bloomberg News) Commodities may rebound from their first retreat in three years as developing economies shore up global growth, driving demand higher at a time when raw-material producers are already struggling to keep up.
Precious metals will advance 27 percent or more, industrial metals at least 17 percent and grains 5 percent, according to the median estimates in a Bloomberg survey of 143 analysts, traders and investors. Nine of the 15 commodities covered by a similar survey a year earlier reached their predicted highs in 2011, with another five no more than 4 percent away.
The Standard & Poor's GSCI Total Return Index of 24 raw materials rose 16 percent through April, before tumbling 15 percent on mounting concern that Europe's debt crisis and slower Chinese growth would curb demand for commodities. A 6.1 percent expansion in developing economies this year will help sustain global growth at 4 percent, above the average over the past decade, the International Monetary Fund predicts.
"The biggest thing driving commodities is the emerging world," said James Paulsen, 53, the Minneapolis-based chief investment strategist at Wells Capital Management, which oversees about $330 billion of assets. "The emerging world slowdown bottoms out in the first half of the year and by the second half it's accelerating again. You've also got the U.S. economy not just avoiding recession, but growing again."
The S&P GSCI gauge fell 1.2 percent last year, the first decline since a 46 percent slump in 2008, with cotton, natural gas, cocoa and sugar leading the retreat. That still beat the 9.4 percent drop in the MSCI All-Country World Index as $6.1 trillion was wiped off the value of global equities. The Dollar Index, a measure against six major trading partners, advanced 1.5 percent and Treasuries returned 9.8 percent, a Bank of America Corp. index shows.
While only gold is predicted to reach a record in 2012, rising as much as 33 percent to $2,140 an ounce, respondents in the survey anticipated that every one of the 15 commodities covered would gain. Gold for immediate delivery traded at $1,613.88 an ounce at 6:06 p.m. in London.
Silver, the precious metal most used in industry, will advance as much as 44 percent to $42.20 an ounce, a price last reached in September, the median of 41 estimates shows. Zinc may be the best-performing industrial metal, rising as much as 28 percent to $2,400 a metric ton, a level last touched in August, based on the median of 21 expectations.
Arabica coffee, the variety favored by Starbucks Corp., may be among the best performers in so-called soft commodities, gaining as much as 21 percent to $2.725 a pound, the median of 26 forecasts shows. Corn will outperform wheat and soybeans, advancing as much as 6.4 percent to $7 a bushel, according to the median of 36 predictions. Both prices were last reached in September.
"The highest quality in every asset class wins," said Charles Morris, who oversees about $2.2 billion at HSBC Global Asset Management in London. "The highest-quality commodity is gold. High-quality currencies, high-quality equities, high- quality bonds, high-quality commodities have been the best place to be in 2011, and I expect that to be repeated."