The report gives a bullish outlook in 2013 and 2014 for eight of 14 commodities it evaluated. Estimated two-year gains range from 3.05% to 17.3%.
Money Morning Global Resources Specialist Peter Krauth agrees most commodities will perform well. In fact, he projects even higher growth than Morgan Stanley's outlook.
"With central banks on their virtually uninterrupted fiat money-printing spree bound to continue for the next few years, hard assets remain a great place to be," Krauth says. "That being said, some commodities will undoubtedly do better than others."
Investing in Commodities: The Outlook for 2013-14
Here's the Morgan Stanley report rundown on eight commodities headed for price gains:
- Aluminum: Further infrastructure- and construction-related stimulus from China should move prices up in 2013. But the current level of supplies and high production capacity will put a floor on prices in 2014.
- Copper: Growth in the supply of copper will be slow over the next five years and demand should increase, especially from China as the country's infrastructure and auto markets stabilize.
- Nickel: Nickel remains at mid-2009 lows due to a growing oversupply and weak demand, but should rebound over the next two years.
- Zinc: A sharp drop in 2012 production in China helped cut into an oversupply of zinc that dates to the financial crisis of 2008-2009. And if China's new leadership supports infrastructure growth, that will boost zinc prices as well.
- Gold: The Federal Reserve's QE3, combined with the European Central Bank's unlimited bond-purchasing program, will continue to push the yellow metal higher, but lowered demand could limit prices in 2014.
- Silver: Production at mines has stalled since 2011 and demand should continue to increase, especially for use in electronics and jewelry.
- Platinum: Supply issues in South Africa that eliminated the surplus of platinum, coupled with strong industrial demand, should keep this metal moving higher.
- Sugar: A global surplus of sugar, due to higher-than-expected production from Brazil and India, should prevent major changes in prices for the next two years.
Aluminum ended 2012 at $2,087/metric ton. The projection for 2013 and 2014 is $2,300/metric ton - a 10.21% increase from the end of 2012.
Copper ended 2012 at $3.61/pound. The 2013 projection is $3.90/pound, up 8.03% from 2012. The 2014 projection is $3.72/pound, up 3.05% from 2012.
Nickel ended 2012 at $17,448/metric ton. The 2013 projection is $18,300/metric ton, a 4.88% increase from 2012. The 2014 projection is $19,800/metric ton, up 13.48% from 2012.
Zinc ended 2012 at $2,040/metric ton. The 2013 projection is $2,200/metric ton, an increase of 7.84% from 2012. The 2014 projection is $2,300/metric ton, up 12.75% from 2012.
Gold ended 2012 at $1,665/ ounce. The 2013 projection is $1,853/ounce, up 11.29% from 2012. The 2014 projection is $1,800/ounce, up 8.11% from 2012.
Silver ended 2012 at $30/ounce. The 2013 and 2014 projection is $35/ounce, an increase of 16.67% from 2012.
Platinum ended 2012 at $1,524/ounce. The 2013 projection is $1,715/ ounce, up 12.53% from 2012. The 2014 projection is $1,785/ounce, up 17.13% from 2012.
Sugar ended 2012 at 19.2 cents/pound. The 2013 projection is 19 cents/pound, down 1.04% from 2012. The 2014 projection is 20 cents/pound, up 4.17% from 2012.
5 Commodities That Could Really Outperform
Krauth agrees with Morgan Stanley's commodities team that gold is the safest and best commodity going forward.
But he expects the highest return from silver prices.
His 2013 price targets are $2,200/ounce for gold, which would be up 32.13% from the end of 2012, and $54/ounce for silver, for an 80% increase.
Both of these increases will be spurred by the inflationary actions of central banks, strong investor demand and decreased supplies. Krauth expects silver to outperform gold because of the added demand from its various industrial uses, and its low price compared with gold.
Krauth also sees higher prices for platinum and palladium.
Increased use of platinum and palladium in automobiles is expected to help drive consumption of the metals up 7% - 8% this year, Krauth said. But ongoing labor problems in Africa, which produces most of the world's platinum and palladium, will reduce supply of the metals, he said.
Krauth predicts the price of platinum will rise to $1,850/ounce in 2013. He foresees palladium, now trading at about $725/ounce, rising to $800 this year.
Copper, Krauth forecasts, will rise above $4/pound this year.
Read more Money Morning coverage of commodities.
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