Deutsche Bank Says Commodities Prices to Rise in 2005 By Laura Humble
Jan. 7 (Bloomberg) -- Deutsche Bank AG, Europe's third-
largest bank by assets, is maintaining a ``bullish outlook'' for
most commodities prices in 2005 as the dollar weakens and oil
supplies face threats in the Middle East and Russia.
``Iraqi elections, policy chaos in Russia, Iran's nuclear
plans and Chinese demand'' will keep oil prices high, Michael
Lewis, Deutsche Bank head of commodities research in London, said
in a report today. Gold aluminum, copper and zinc will set new
multiyear highs, and corn and wheat may rebound, he said.
``Since investors tend to be overly optimistic about asset
markets which have been past winners and overly pessimistic about
past losers, we are positioning for a new wave of risk capital to
enter the complex this year,'' Lewis said.
Crude oil for February delivery fell 19 cents, or 0.4
percent, to $45.37 a barrel on the New York Mercantile Exchange as
of 1:23 p.m. in London. Prices reached a record $55.67 on Oct. 25.
Sabotage, Yukos
Oil shipments from Iraq, holder of the world's third-largest
reserves, have been reduced by an upsurge in violence as the
country prepares for elections on Jan. 30. Russia, the world's No.
2 oil exporter, broke up its second-biggest oil producer, OAO
Yukos Oil Co., last year to reclaim unpaid taxes.
``Oil-directed sabotage both ahead of, and after, the
election could have a significant impact on Iraq's production,''
Lewis said. ``The uncertainties surrounding Yukos and the oil
business in Russia could have important implications.''
Iran, holder of the world's second-largest oil reserves,
negotiated with diplomats from France, Germany and the U.K. for
more than a year before agreeing Nov. 29 to stop uranium
conversion. U.S. President George W. Bush had said he was
concerned Iran was accelerating efforts to build nuclear weapons.
``The worry is that the U.S. might take military action,''
Lewis said. ``Iranian politicians have said if their nuclear
facilities are attacked they will retaliate. Such an event would
have incalculable implications for the oil markets.''
China's Growth
China's economy grew at a 9.1 percent annual pace in the
third quarter, outpacing growth of 4 percent in the U.S. and 1.8
percent in Europe. China is the world's largest copper buyer,
second-biggest oil user, and the third-largest consumer of gold
jewelry.
``We are forecasting Chinese GDP and industrial production
growth to rise this year,'' Lewis said. ``This will lead to a
further increase in the share of Chinese commodity consumption as
a proportion of the world.''
Gold for immediate delivery in London fell 4 cents to $421.36
an ounce. It reached a 16-year high of $456.89 on Dec. 2. Deutsche
Bank's target price for 2005 is $480.
Dollar-denominated gold tends to rise as the U.S. currency
drops, making it more attractive as an alternative investment and
cheaper for holders of other currencies. The dollar, at $1.3191
per euro as of 1:23 p.m. in London, will drop to $1.50 by the end
of 2006, Deutsche Bank predicted.
Copper Prices
Copper for delivery in three months rose $23, or 0.8 percent,
to $2,975 a metric ton on the London Metal Exchange. It reached a
16-year high of $3,179.50 on Oct. 11.
Aluminum for delivery in three months rose $9, or 0.5
percent, to $1,816 a ton. It reached $1,972 on Dec. 31, the
highest since 1995. Zinc for delivery in three months advanced
$10, or 0.8 percent, to $1,217 a ton. The contract reached $1,262
on Dec. 30, the highest since 1997.
Deutsche Bank's target prices for copper, aluminum and zinc
are $3,350, $2,250 and $1,400 respectively, the report said.
Wheat for May delivery rose 0.5 percent to 67.45 pounds
($127) a ton on the London International Financial Futures and
Options Exchange. It has fallen 26 percent in the past 12 months.
Corn for December delivery rose 0.25 cent to $2.0875 a bushel
on the Chicago Board Trade. Prices touched a 31-month low of
$1.955 on Nov. 12.
--Editor: A. Brown, Farr |
