Saturday, December 8, 2012

Morgan Stanley Picks Gold, Corn, Soybeans for 2013

Morgan Stanley reiterated its call for gold, silver, corn and soybeans to outperform other raw materials as a weaker U.S. dollar and investor demand bolster precious metals and supply curbs support grains.

Silver will track higher prices in gold, which is poised to rally on low real interest rates, buying by central banks and more geopolitical uncertainty, analysts including Peter Richardson and Hussein Allidina wrote in a report today. Corn and soybeans should benefit from production delays in South America, they said. The bank is bearish on aluminum, nickel, sugar and uranium as supplies are set to outpace demand.

Commodities tracked by the Standard & Poor’s GSCI Spot Index are down 0.4 percent this year, led by declines in coffee, cotton and sugar. The gauge nearly doubled in the three years to 2011 as central banks and governments around the world took action to boost their economies hurt by the global financial crisis in 2008. Morgan Stanley joins Goldman Sachs Group Inc. in predicting the so-called super-cycle isn’t over.

“Higher prices in recent years have brought both a supply and demand response, bringing many to call for the end” of the super-cycle, the analysts wrote. “We view this as too simplistic. Commodities are cyclical, but the elasticity of supply and demand, as well as the length of the cycle, vary significantly across the complex.” (more)

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