After the worst commodity collapse in a generation, there might be some glimmers of hope.
Gold, wheat and natural gas probably will climb in 2016, according to a Bloomberg survey of 108 traders, analysts, economists and strategists across Asia, Europe and the Americas. It won’t all be positive. For oil, mired in the longest slump since 1998, bearish respondents said prices might drop below this week’s six-year low, while the survey showed overwhelming pessimism for copper.
The 2015 meltdown sent almost every commodity lower, shrinking profits for companies including South African mine owner Anglo American and energy producer Royal Dutch Shell. The world got stuck with raw-material surpluses after years of expansion met a slowing economy in China.
With producers struggling to halt losses, they are selling assets, cutting dividends and slashing output, which might be enough to put a floor on prices.
“You’re going to see a lot of zigs and zags along the way, but in 2016, there’s the chance that we start to see a bottom, or a stabilization, for commodities,” Quincy M. Krosby, a market strategist at Prudential Financial Inc., which oversees about $1.3 trillion, said by telephone from Newark, N.J. “This isn’t the suggestion that there’s a boom around the corner. But, right now, a lot of investors are looking for less bad news. There are some signs that we’ve turned into a bit of a positive trajectory.”
The Bloomberg Commodity Index, a measure of returns for 22 components, has tumbled 24 percent in 2015, heading for a fifth straight annual loss and the longest slide since the data begins in 1991.
Cotton and sugar were the only gainers. Nickel was the worst performer, tumbling 43 percent on speculation that cuts in mine supply still aren’t deep enough to trim the global glut. Heating oil traded in New York had the second-biggest drop, with a loss of 35 percent.
Expectations for more stable prices underscore the outlook of Citigroup, which anticipated the end of the commodity super cycle in late 2012. Supplies will start tightening in the second half of next year, and markets will find more support into 2017, analysts led by Ed Morse said in a November report.
