As rising supplies and slowing demand compound dips that led to last year’s bear market in gold, copper and corn, Bloomberg reports that banks expect commodities to head that way again in 2014.
The super cycle that led commodities to almost quadruple since 2001 is reversing, with prices set to drop 3% in 12 months, reports Goldman Sachs Group Inc.
"The hot money is no longer in our space," says Dan Basse, president of AgResource Co. Bloomberg reports: "Raw materials from copper and corn to sugar and coffee will be in surplus this year after a decade-long bull market spurred producers to build new mines, drill more wells and expand planting of crops. Investors pulled a record $43.3 billion last year from commodity funds tracked by EPFR Global, and hedge funds cut bullish bets across 18 U.S. futures by 53% from an all-time high in September 2010."
Despite all the negative news, Joseph Quinlan, managing director and chief market strategist at U.S. Trust—Bank of America Private Wealth Management, says ag commodities are still a good investment.
- March 2014