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The Bull Case
CNBC.com | March 12, 2012 | 11:28 AM EDT

Valuing commodities is a bit like shopping for a wardrobe. For the latest haute couture styles you’re going to pay a premium while abundant inventories of basics will be much cheaper.

Long-term trends including a growing middle class and increased industrial development in emerging markets should make most commodities long-term winners, but determining the hot performers over the next 12 months is trickier.

Like buyers who price high fashion, some commodity managers break the decision down to supply levels.

“Tight inventory levels and supply shocks often drive commodity prices higher,” says Sassan Alizadeh of Highbridge Capital Management. “Many of the commodities that have rallied a lot over the past few years have been in tight supply.”

Using this metric, 2012 should be a good year for cornand refined oil products. Corn is already in tight supply worldwide, and expectations of poor weather in the growing regions of South America over the next several months could cause inventories to shrink further.

With prices back over $100 per barrel, crude oillooks like another strong performer, although the oil situation is complicated.

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