26 Mar 2013 11:52

Bottoming commodity prices provide buying opportunities

In the past month, both the OECD and the Bank for International Settlements (BIS) warned that this year’s exuberant rally on financial markets does not match an equally strong improvement in the underlying global economy.

”There is a substantial risk of a temporary setback to both risk appetite generally and equity markets specifically. For now, it will not take much to trigger a correction, depressing already weak commodity prices even further, to create the long entry opportunity of the year,” says Filip Petersson, commodity strategist at SEB.

He says that crude oil prices are expected to be flat in a short term perspective, with limited downside risk, providing excellent buying opportunities to hold on to into the second half of the year.

The development is similar for industrial metals, but with a larger downside risk in the short term..

Precious metals are expected to be flat in the near term, but for the full year downside risks dominate. SEB´s experts predicts that the gold price will be lower by the end of the year.

Grain is expected to trade sideways during the next six months, but in the long term SEB´s experts remain bearish as prices remain very high, weather patterns are forecasted to be stable and farmers worldwide have every incentive to produce as much grain as possible.