10/10/2007 (The Star Online) - THE global commodities boom is expected to continue for at least another five years, thanks to the growing supply and demand imbalances worldwide as well as huge demand from emerging economies like China and India.
Analysts said commodities like metal, energy and food-based, which are in their fifth-year upcycle, were currently trending upwards after the much-needed correction last month due to the US subprime scare.
They concurred that demand for energy, particularly in Asia, would rise further, which meant the price of crude oil would continue to appreciate and might hit as high as US$100 per barrel in the future.
The inventories of other resources like base metal and food-based oilseeds are depleting as the rapid industrialisation of China, India and certain parts of Latin America spurs demand.
“The growing population in the emerging economies, with three billion people, is putting immense pressure on the planet's resources.
“Just look at the high rate of oil and metal-related exploration activities worldwide to cater for the surge in demand,” said one analyst with a foreign stockbroking firm.
He said supply constraints would support commodity prices in the long term but cautioned that “it is not the right time to be overly bullish about the extent of price gains.”
Analysts contacted by StarBiz hold mixed views on whether the record high prices in commodities – following a rally whose extent had not been seen in over five decades – can be sustained in the current supercycle compared with the normal three-year upcycle.
Many dismissed the idea of a potential bubble in commodities, while some likened the current commodity bull-run to the case of Japanese stocks in the 1990s and the Internet bubble in 2000.