Speculators are roaring back into commodities according to Citi investment Research's Alan Heap. Developed nation demand could be the next growth story to boost prices, finally rebounding post crisis. Developing nations will continue their demand growth as well.
Alan Heap @ Citi: End Uses are Improving. In the USA the major end uses – auto production, construction, housing starts, packaging, appliances, housing are improving, with autos in the vanguard, housing the laggard. So it’s all in front of us. We expect demand to turn positive in coming months and the restocking amplifier, after two years of inventory drawdown, will be powerful.
For commodities overall, net long positions are rising, as shown by the black line below.
Moreover, Oil has attracted massive long-biased interest. Oil's net long position is near the highest level it has been all decade, as shown by the yellow line below.
Finally, gold traders remain massively net long. 'Gold is surging' according to Alan Heap. Net long positions could soon achieve a new high.
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(Via: Citi, 'Commodity Heap', Alan Heap, 5 February 2010.)
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