Here are a few more scraps of analysis about 2011 crop and commodity prices:
Barclays Capital:
Corn in 2011 is the best bet among the big crops, backed by a “slew of fundamentals.”
But crops in general look firm, the global bank said, and commodities in general have lots more room to rise, if the history of economic and market recoveries is anything to go by. Barclays noted that in other economic recoveries, most commodities rose well above the level they were at at the start of recessions. But now many commodities are generally below the level they were at in late-2007, early-2008, when economic darkness entered our lives.
Read Also
Agriculture needs to prepare for government spending cuts
As government makes necessary cuts to spending, what can be reduced or restructured in the budgets for agriculture?
Continued government spending – causing inflation – and continued economic growth in the emerging markets means commodities have every reason to rise.
Morgan Stanley:
Corn and soybean prices both need to rise to grab the acreage they need in 2011, and to snuff out some of the demand. That should make for a generally strong crop market in early 2011.
Morgan Stanley placed corn and soybeans – the global leaders of the cereals and oilseeds complexes – into its list of best commodity bets for 2011, joining copper, crude oil and gold. Worst bets are zinc, cattle and natural gas.
But even though Morgan Stanley has a generally optimistic view of the potential of commodity prices to rise, it sees big risks that could damage that potential, including the European sovereign debt crisis.
Scotiabank Global Economic Research:
Scotiabank has a generally bullish outlook for commodities in 2011. Of particular interest to agriculture, but not necessarily in an entirely good way, the bank is predicting China’s 12th Five Year Plan (Can you believe they still do those things?), which should be announced by March, will likely boost China’s food consumption because it will focus less on boosting China’s manufacturing exports and instead focus on domestic consumption.
Scotiabank thinks China’s demand for meat will drive demand for more growing within China of corn, and corn being a fertilizer hog, its demand for fertilizers will no doubt rise between 2011 and 2015.
“Potash and fertilizers will be in strong demand in the next five years as rising consumer incomes allow households to consume more meat (requiring fertilizer-intensive feed grains such as corn).”
Bank of America:
(I kept the worst for last. Bank of America has one of the few analyses I found that’s anyway bearish about crops, even if it’s generally bullish about commodities.)
“Commodity prices will rise, led by oil, copper and coal. According to Francisco Blanch, head of Global Commodities Research, oil may rise to $100 per barrel, and copper is forecast to average $11,250 per metric tonne in 2011. Coal faces supply restraints and is heavily geared toward emerging market growth. Precious metals will continue to benefit from inflation and sovereign debt fears, and gold could reach $1,500 per ounce. In contrast, agricultural commodity prices are more likely to fall in 2011.”
(BoA, just like Barclays, highlights the risk of a 2008y-like all-markets slump, tempering its generally positive outlook for world economic growth and market potential.)
“After the epic market drama of 2008 and 2009, arguably the biggest surprise of 2010 was the normality of asset price returns. Going into 2011, the probability of market tail risks is likely to remain elevated, with the spectre of premature fiscal tightening, a double-dip in U.S. housing values, exploding borrowing costs in Europe and potential oil price spikes all looming over our forecasts.”
