A recent report from the Economist Intelligence Unit (EIU) says that industrial commodities will probably continue to fall in 2009 as the price index is projected to plunge by up to 41 percent this year.
On the other hand, in 2010, expectations from the EIU report says prices of the majority of industrial raw materials should bounce back in at least a limited amount in prices, although in the long term most investors and futures traders are positive about the return of the bull market in commodities.
In the auto industry, that continuing decline will cause natural rubber demand to fall even more, as synthetic rubber becomes more competitive in price (that'll last as long as petroleum prices remain down), and platinum, while expected to fall in demand in 2009, possibly pressuring platinum prices and futures down, there could be an override there from investors speculating.
The recent announcement that Indian consumers are migrating from gold to platinum may offer some support in 2009 as well.
Obviously gold and silver futures and prices should enjoy a solid year in 2009, as investors continue to look for the few places of safety available, as confidence in the U.S. slides as investors start to understand forced liquidation propped it up when it should have been falling, and now they're starting to flee it as they see the fundamentals and huge bailouts will continue to undermine its strength.
Availability of credit in the latter part of 2008 and early part of 2009 have also affected the movement of commodity stocks as financing has held back acquisition of raw materials in many cases and many companies.
Cutbacks by producers has also generated the possibility that supply may be more difficult to acquire this year, putting more pressure to meet demand and move the stock prices higher. Shortages could be a reality with some raw materials in 2009.
Demand for metals in the consumer electronics sector has also left demand down, and so prices are expected to be pressured down for metals used there too.
The one unknown question out there is how far along companies are in forced liquidation. If their positions are mostly unwound, base metals may be a little stronger than expected, although most aren't holding out much hope for 2009, and are looking for 2010 for the beginning of a modest recovery.
Some companies may have enough cash and credit lines available to tap, and so may do well, others probably will take longer, the reason its such a mixed commodity futures market at this time, and investors are being cautious.
That's also a factor with the U.S. dollar, which will assuredly contract and collapse some this year. Again, the U.S. dollar has benefitted from forced liquidation because of commodities being sold to raise capital which has artificially kept the U.S. dollar strong because of most commodities being dollar denominated.
With the ongoing recession across the world, there's little hope that oil prices and futures will rise any time soon, a reason the super contango has been helping the pocket books of those investing in it.
Investors are simply buying and storing oil in supertankers until prices start to move again. Their hope is obviously the storage costs won't outpace the price increase, however incremental they may be.
Because it's a super contango, the futures are much further out than normal, and investors can more easily make those decisions.
Although it's not quite here yet fully, the commodity market, as far as gold and silver goes, is starting to behave somewhat predictably again, as investors run to a haven of safety with their capital.
Other industrial raw materials and futures will struggle to go up this year in any meaningful way, and we can expect this behavior for the rest of 2009.
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