Commodity prices may fall for months on weaker demand and lower market expectations before they recover, Commerzbank AG analyst Eugen Weinberg said.
Commodities have dropped 10 percent this month, the Standard & Poor’s GSCI Spot Index of 24 raw materials shows. Investors have tempered their optimism about the U.S. and world economies and plan to put more money in cash and less in commodities over the next six months, a Bloomberg survey found last week. Thirty percent of the 1,263 investors, analysts and traders asked said they would reduce commodity investments.
“We still have some weeks or even probably months to complete the correction from too-high expectations,” Weinberg, head of commodities research at Commerzbank, told Bloomberg Television today in London. “The demand situation especially has changed to the negative recently.”
He cited lower U.S. construction activity, debt concerns in Europe and some demand destruction in Japan and North Africa. Commodities remain 40 percent higher than 12 months ago and Weinberg said a return to a “bull run is still around the corner.” That would be driven by constrained supplies for many raw materials, including metals and agricultural goods, he said.