The weather patterns across the globe are oscillating between the extremes. This is directly impacting the current year crops and the crop patterns for years to come. The situation is alarming in many key crop producing countries. The reduced production of soy, wheat and corn is sending alarming signals about meeting the future demand. So expect the agriculture commodities to rally higher up. The declaration of stimulus package by Fed is expected to drive the dollar down and raise the commodity prices. The Indian government`s decision on diesel prices is going to affect the commodity prices in India.
The crude prices are largely driven by growth prospects or the sentiments around growth. The crude prices went up by 50% after the first round of Quantitative easing and went up by 30% more after the second one. The third installment is also no different and it helped the crude oil prices rally higher up.
Metal prices are influenced by the fundamental law of demand and supply. China is planning for more stimulus to aid its slowing economic growth. Since infrastructure projects are expected to be part of the package, demand for basic metals will be given a boost. The German Federal Constitutional Court`s decision in favor of the ESM helped the base metals rally. This could potentially boost the metal prices in short term. Rising costs of metals and crude oil can work against India as higher inflation is expected at a time when growth has taken the backseatCommodities are a good place to be in the next one year. Agri commodities would give the most return. Other commodities will move based on sentiments only.
