Commodity Price Skeptics

December 16, 2009 06:00 PM

Linda H. Smith, Top Producer Executive Editor
Even as investors pour money into commodities as an inflation hedge, the economists at IHS Global are not convinced the gamble will pay off, at least in the short term. "Early this year, it was probably justified by market fundamentals,” says Nariman Behravesh, chief economist. "Now it is difficult to justify—demand is weak and inventories are high.”
He expects prices of crude oil, natural gas and industrial materials to soften. "

Specifically, oil prices are expected to fall from current levels in the $75-$80/barrel range to around $65/barrel by spring, before gradually moving above $70 by the end of 2010, as the economy pick ups steam.”
Should investors lose interest when that occurs, the negative impact could trickle down to ag commodities as well.


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