* Credit Suisse see commodities stronger in 2010
* Weak dlr to lift gold, demand for base metals to pick up
SINGAPORE, Nov 11 Commodity markets are set to
break higher, bolstered by improving fundamental conditions as
more and more of the world emerges from recession, Credit
Suisse analysts said in a note on Tuesday.
The bank argued that although commodity indices moved
sideways for much of the third quarter -- the Reuters/Jefferies
CRB index traded between 250.13 and 259.39 in the third
quarter, since when indices have started to rally, with the CRB
touching a high of 285.18 in the fourth quarter so far.
"Starting in early October, commodity indices began to
increase more decisively. We think this is the start of a more
sustained uptrend that could last for most of 2010 and possibly
even longer," the analysts said.
"In our view, the economic environment for commodities is
now favourable enough to trigger a new cycle for prices. Supply
and demand factors are both working toward tightening market
balances and therefore toward higher prices."
The bank saw further gains in precious metals, with gold
likely remaining strong to the end of the year, and strength
was also seen in platinum on rising demand from the automotive
"Given prevailing dollar weakness, falling real interest
rates, strong investment demand and the positive technical
picture, we think that gold prices are likely to have a strong
rally into the end of the year.
"Moves significantly beyond $1,100 are possible on buying
enthusiasm but are well beyond the range supported by
Energy prices were expected to consolidate and even fall
slightly in the fourth quarter, checked by large inventories of
heating oil in the United States, but prices would begin a
sustained rally in 2010 and carry on through to 2011.
"Due to a prevailing inventory overhang in the U.S. heating
oil market and negative seasonal effects in the fourth
quarter, we think that prices are likely to consolidate or
trade slightly lower until end-2009. However, starting in early
2010, oil prices are likely to start a more sustained uptrend."
The bank forecast WTI crude oil rising to $90 to $95 by the
end of the first quarter of 2011.
Credit Suisse tipped copper as a strong performer in base
metals, rising as the economic cycle develops and OECD demand
"We expect a positive performance of base metals in the
coming months," the report said.
"A bit further down the road, the outlook remains very
positive. Falling ore grades should keep supply tight, while
demand prospects look promising with the recovery of global
industrial production at an early stage." Commodity overview
Close Nov 9 End Q1 2010 End Q1 2011
Precious metals $/oz
Gold 1103.80 900-1000
Silver 17.59 15-16 17-18
Platinum 1358.00 1400-1500
Palladium 333.75 300-350 330-380
WTI 79.43 75-80 90-95
Brent 77.77 73-78 88-93
Base metals $/tonne
Aluminium 1952 2000-2100
Copper 6539 6700-6900
Nickel 17430 20000-21000
Zinc 2160 2400-2500
Lead 2300 2300-2400
Tin 14750 15000-16000
(Reporting by Nick Trevethan; Editing by Clarence Ferandez)