JPMorgan Turns Bullish On Commodities

For the first time in almost 2, years, analysts at JPMorgan have turned bullish on commodities and are now overweight the entire complex, though it’s the energy sector they are most excited about…“In a number of commodities, prices have fallen far enough for long enough to force involuntary cuts in production and to spur fresh demand,” the bank said in the report released Sunday…“Risk is now skewed toward demand growth surprise and production disappointment…“Our analysis concludes that it is in the best interests of most commodity index investors to buy immediately,” they said…“We would rather be premature in our pretend portfolio than you be late in your real portfolio”…the firm is slightly more bullish on energy commodities, particularly Oil, than it is in precious and base metals – the analysts said in the report that their “overweight” view is based on the energy sector “that dominates most indices”…JPMorgan also pointed out that while the U.S. Dollar Index has been gaining strength, which has obviously hurt Gold, the Chinese yuan continues to appreciate in value…“Though the rate of appreciation has slowed following the June summit of Presidents Xi and Obama, the move has provided the world’s largest metals consumer with greater purchasing power to restock in commodities where it is import dependent, such as Copper,” they stated…

Meanwhile, Commerzbank stated yesterday that “negative news should now be largely discounted in (base metal) prices and we do not anticipate further significant falls…On the contrary, if metal prices remain below the production costs for any length of time, production is is likely to be cut substantially, thereby supporting prices…the current low prices appear to present attractive buying opportunities on a long-term view”….