Morgan Stanley's #Commodities Outlook - Business Insider

MORGAN STANLEY: This Is What The The World's 14 Most Important Commodities Will Do

Rob Wile | Sep. 24, 2012, 7:30 AM | 15,201 |

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Sugar cane plantation in Mauritius

With the growing global population increasingly demanding goods, many financial advisors have advised clients to invest in commodities. Morgan Stanley's commodities team led by Hussein Allidina favors soybeans, corn, and wheat as poor weather conditions slam supplies.
They also like precious metals, particularly gold and silver, as loose monetary policy sends investors seeking something with more stable value.  In fact, Morgan Stanley recently called the Federal Reserve's latest action a game changer for the yellow metal.
What follows are Morgan Stanley's opinions and price targets for 14 major commodities.

Brent oil continues to be affected by geopolitical tensions

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Projected 2012 average: $110 /bbl
2013 price: $115 /bbl

Middle East unrest and and easy central bank monetary policies continue to support oil prices, though softer fundamentals heading into 4Q12 should weaken year-end crude prices. Risks are skewed to the upside for 2013.

Source: Morgan Stanley

Natural gas supplies will tighten by the end of the year, eventually sending prices higher

Natural gas compressor station

Sergei Grits / AP Images

Projected 2012 average: $2.74 /mmBtu
2013 price: $4.00 /mmBtu

Oversupply continues to weigh, but slowing gas-directed drilling may begin to help tighten balances by late 2012.

Source: Morgan Stanley

 

Aluminum prices will stay at low levels due to oversupply and too much production

Sean Gallup/Getty Images

Projected 2012 average: $2,100 /MT

2013 price: $2,200 /MT

Very high global inventory and excessive production capacity will lead to up to two years of headwinds.

Source: Morgan Stanley

Copper prices will lead the industrial metals due to supply concerns

Flickr via blmurch

Projected 2012 average: $7,900 /MT

2013 price: $8,300 /MT

Supply difficulties will keep copper prices elevated — the global inventory pipeline remains soft.

Source: Morgan Stanley

Nickel supplies remain high, but price risk is to the upside

Projected 2012 average: $17,800 /MT

2013 price: $18,300 /MT 

Supply risks from any new project delays and the impact of developments in Indonesia will keep the market primed for a price rally.

Source: Morgan Stanley

Zinc will continue to suffer from oversupply for several more quarters

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Projected 2012 average: $2,000 /MT

2013 price: $2,100 /MT

Record-high inventories at the current rates of demand weigh on prices, but production is slowing. 

Source: Morgan Stanley

Gold is the best commodity to own right now

World Gold Council

Projected 2012 average: $1,677 /oz

2013 price: $1,816 /oz

Interest rates, risk aversion and strong physical market fundamentals will serve as tailwinds.

Source: Morgan Stanley

Silver prices will be supported by the same forces fueling gold's rally

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Projected 2012 average: $32 /oz
2013 price: $35 /oz

Negative real interest rates will limit downside price risk.

Source: Morgan Stanley

Platinum lacks the safe-haven status of gold or silver

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Projected 2012 average: $1,554 /oz

2013 price: $1,715 /oz

Platinum lacks safe haven status and has limited investment demand. Slowing global GDP and lower discretionary spending remain headwinds.

Source: Morgan Stanley

See the full list here: Morgan Stanley's Commodities Outlook - Business Insider