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Eight commodity themes for 2014

After a tough 2013 for commodities, Deutsche Bank's Markets Research team gives its 2014 forecast for the asset class.  

1. Crude oil supply glut

[Deutsche says]:

‘Rampant US oil supply growth and upside risks to Libyan and Iranian crude oil exports imply a bearish environment for global crude oil markets next year.’
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2. How to play lower oil prices

‘A growth boost from falling oil prices should sustain the improvement in European car sales and hence tighten platinum fundamentals. Falling energy costs will also pressure cost curves lower across the aluminium industry.’
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3. Calling the bottom of the refining cycle

‘The expansion in Asian and Middle Eastern refinery will aggravate the current refinery capacity glut. We are therefore bearish margins.’
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4. Weather and storage will dominate in driving the US natural gas market

‘The role of utility fuel switching will be less important next year with prices more a function on the vagaries of weather and storage factors.’
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5. Positioning for a China rebound

‘A turn in Asian export growth and a deceleration in new fleet growth will boost freight rates while falling inventories and a positioning unwind among the investor community should boost copper.’
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6. Fed tapering

‘We expect positive growth shocks in the US and Fed tapering to drive US real yields and the US dollar higher. Consequently, we expect ongoing downside risks to gold.’
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7. Industrial metals

‘We stick to zinc and lead as the relative winners next year. However, we expect mean reversion strategies will eventually outperform.’
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8. Farm subsidies in China

‘As the Chinese government moves away from stockpiling and toward direct farm subsidies, we expect this will discourage agricultural imports.’
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