will favor industrials.
What’ll push the global appetite for commodities, such as copper, through the roof? Emerging markets, of course, fueled by a growing work force and increasing productivity.
Look at China (NYSEARCA:FXI) … PMI statistics are the best in seven months.
And Brazil (NYSEARCA:EWZ) … in October industrial output posted its first annual increase in more than a year. The Brazilian government put through a tax break on autos that helped support a nascent recovery in the country’s beleaguered manufacturing sector.
Going forward, I think there may be …
Three Main Opportunities in Commodities Next Year
Opportunity #1— Higher crude oil
Watch the S&P GSCI® Petroleum Index as an indicator. A higher price scenario assumes a combination of Iranian sanctions, low inventories, and limited spare OPEC production capacity.
You might consider United States Oil Fund LP (NYSEARCA:USO). This is the most actively traded oil ETF. Although it’s not the most efficient tracker of oil prices, you can’t beat the liquidity for moving in and out of the market.
Opportunity #2— Higher corn prices
The Teucrium Corn Fund (NYSEARCA:CORN), a corn exchange traded fund, has been one of the best performing funds this year as the worst drought in half a century decimated crops. For corn, I’m in the camp calling for a forecast of lower U.S. corn production next year. I’ve seen the damage and believe it will ripple into next year.
If nothing else, the cost of farming will also increase creating more pressure on prices. I also expect corn to lose acreage to other crops ahead of next spring’s U.S. planting season.
Opportunity #3— Higher copper prices
iPath DJ-UBS Copper ETN (NYSEARCA:JJC) is showing signs of life again. As I mentioned, the robust growth in Chinese production figures bode well for copper’s future. In addition, you can expect more construction projects completed and a pick-up in Chinese property sales. Plus there should be a modest rebound from other markets that could further support demand through the middle of next year.
On the copper mine supply side there is likely to be production growth, but that’s not a noticeable surplus factor until 2014.
To sum it all up: This near-term tightness in crude oil, corn, and copper should create some eye-popping opportunities for you in 2013.
Uncommon Wisdom (UWD) is published by Weiss Research, Inc. and written by Sean Brodrick, Larry Edelson, and Tony Sagami. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in UWD, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in UWD are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Andrea Baumwald, John Burke, Marci Campbell, Selene Ceballo, Amber Dakar, Roberto McGrath, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Marty Sleva, Julie Trudeau, Jill Umiker, Leslie Underwood and Michelle Zausnig.
This investment news is brought to you by Uncommon Wisdom. Uncommon Wisdom is a free daily investment newsletter from Weiss Research analysts offering the latest investing news and financial insights for the stock market, precious metals, natural resources, Asian and South American markets. From time to time, the authors of Uncommon Wisdom also cover other topics they feel can contribute to making you healthy, wealthy and wise. To view archives or subscribe, visit http://www.uncommonwisdomdaily.com/.