Where to invest in the vulnerable commodities market

OCBC names most bullish and bearish picks for recession-prone 2012.

Commodities as a whole will take a big hit in prices, but gold, livestock and grains in particular will hold or even appreciate in value.

Conversely, commodities that depend on global demand, like crude oil and copper, will feel the most price pressures.

Here's more from OCBC:

2012 Outlook
The year 2011 spelled many events that plagued the global economy. These included the Eurozone debt crisis, US credit rating downgrade, and China hard landing fears have eroded the last fragments of optimism.

Our base scenario in 2012 calls for a volatile but within a large range commodity market underpinned by a recurrent risk-off sentiment and expectation of a weak global growth. We expect the Eurozone debt woes to persist at least till H2 2012, the US unemployment problem to remain unresolved and China to deal with hard landing risks rather than being a savior in these tough times.

With this scenario in mind, we expect commodities most dependent on global growth to exhibit the worst performance in 2012. We remain most constructive in gold, livestock and grains as these commodities have been typically the most resilient in past recessions.

In conclusion, our base case scenario in 2012 favors the safe haven commodities like gold, while growth-link commodities like base metals and energy may exhibit bearish trends. We also remain constructive in livestock and grains as these commodities have been typically the most resilient in past recessions.

Please view the following table for our sentiment ranking on commodities. Ranking from most bullish (10 score) to most bearish (1 score)

Gold (10)
Corn (9)
Wheat (9)
Soybean (8)
Livestock (7)
Silver (6)
Cocoa (5)
Sugar (5)
Palm Oil (4)
Crude Oil (3)
Base Metals (2)
Natural Gas (1)

Do you know more about this story? Contact us anonymously through this link.

Click here to learn about advertising, content sponsorship, events & rountables, custom media solutions, whitepaper writing, sales leads or eDM opportunities with us.

Tags: commodities, commodities market, gold prices, crude oil prices