Oil and metals led the sharp rebound in commodity markets this year, with copper soaring by over 120% and US oil futures rising by 60%.
As far as metals are concerned, now that the pace of Chinese restocking is ebbing, "the Western world needs to deliver a strong demand recovery to fill the gap", says JP Morgan's Michael Jansen. But there has hitherto been scant sign of that, while a bounce in industrial activity in the West would be vulnerable to slowing growth later in 2010 as fiscal stimuli fade, says UBS.
Copper inventories in warehouses monitored by the London Metals Exchange are at their highest since April and nickel stocks are at near-record highs. Crude is beset by weak demand and plentiful supplies, says Debbie Carlson in Barron's, while a dollar bounce is a headwind for the entire sector.
Agricultural commodities look more promising. Sugar has reached a 28-year high over $0.25 cents a pound but is still "the best fundamental story" in commodities, says Hussein Allidina of Morgan Stanley. Supply problems look set to drive prices to $0.30 before Brazil's harvest arrives in April.
Relatively low inventories and shrinking acreage make corn the pick of the grains in 2010.
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