Wang Jingbo
Mainstream international investment banks seemingly have not been "buying high and selling low" in the commodities market.
Yesterday, Goldman Sachs reduced its return forecast for commodities over the next 12 months but increased its return forecasts for crude oil and gold, recommending investors to increase their allocation of raw material assets. Jeffrey Currie, head of commodities research at the institution, stated in a report that due to the rise in commodity prices this year, the bank has lowered its overall return forecast for commodities from the previous 15% to 12%. However, the bank maintained its forecast for Brent crude oil at $127.50 per barrel and gold at $1940 per ounce.
The S&P GSCI Index, which tracks 24 raw materials, shows that commodity prices as a whole have risen by 8.5% since the beginning of the year, reaching a new high in nearly six months. However, these developments have not caused mainstream investment banks to further bullish on commodities.
Compared with Goldman Sachs' views, Morgan Stanley's outlook on the commodities market was more pessimistic previously. In a prior report, Morgan Stanley predicted that the average gold price in 2012 would be $1845 per ounce, a 16% reduction from the previous forecast. The average copper price in the New Year is expected to be $8157 per ton, 3% lower than the previous forecast. Meanwhile, the institution remains bearish on the price prospects for lead, nickel, aluminum, and zinc, citing reasons such as these metals being in oversupply because the global industrial output growth rate this year may be 4.78%, lower than the 5.3% growth rate in 2011. Germany, France, and Italy will experience a contraction in manufacturing under the impact of the debt crisis, leading to a decline in demand for base metals. In the report released on the 20th of this month, Morgan Stanley even indicated that due to issues with crude oil supply and slowing demand, crude oil prices might fall in the first half of this year.
Deutsche Bank also cut its expectations for metal prices over the next year last month, stating that this was mainly due to concerns about the worsening global economy and potential dollar strength. The bank made the largest cuts to its expectations for base metal prices, reducing its forecast for the 2012 copper price by 18.8% to $7350 per ton, its nickel price forecast by 19.0% to $18625 per ton, and its aluminum price forecast by 17.8% to $2138 per ton. Deutsche Bank also cut its lead price forecast by 17.4% to $2138 per ton, its tin price forecast by 17.5% to $20625 per ton, and its zinc price forecast by 12.4% to $2038 per ton.
At the same time, Deutsche Bank also announced reductions in its platinum and palladium price forecasts by 18.7% and 12.8% respectively, to $1525 per ounce and $698 per ounce, and a reduction in its silver price forecast by 9.8% to $37 per ounce. Considering the strong rise of the dollar, Deutsche Bank reduced its full-year average gold price forecast by 3.9% to $1825 per ounce.
However, investors seem to see no signs of pessimism in the capital flow in the commodities market so far this year. Since the beginning of 2012, international gold prices have cumulatively risen by approximately 12%, silver prices have risen by over 22%, copper prices have increased by 11%, US crude oil and Brent crude oil have risen by 6% and 14% respectively, and even agricultural products have rebounded somewhat, with raw sugar and soybeans rising by about 6.6% and 4.3% respectively. Looking at the net long positions of funds in the corresponding US commodity futures, most varieties are still favored by capital. As of last week, the non-commercial net long position in NYMEX crude oil futures rose to an 8-month high of over 205,000 contracts, the non-commercial net long position in COMEX copper futures hit a six-month high, the non-commercial net long position in COMEX gold futures reached 167,000 contracts (the previous week it was 177,000 contracts, the highest since September last year). The non-commercial net long position in US silver futures has rebounded sharply since the start of the year, rising from less than 7,000 contracts to over 25,000 contracts last week. The non-commercial net long position in CBOT soybean futures also rose from nearly zero in December last year to 92,000 contracts.
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