goldman advises buying copper on outlook

Goldman Advises Buying Copper on Outlook for Economic Rebound
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By Chanyaporn Chanjaroen

Sept. 14 (Bloomberg) -- Goldman Sachs Group Inc. advised investors to buy copper in anticipation of a supply shortage as economies rebound.

The bank suggested last week that investors buy copper for delivery in December of next year, according to a report dated yesterday. Goldman Sachs continued to recommend purchasing crude oil and maintaining an “overweight” allocation to raw materials.

“Higher demand against limited production growth will push key commodities such as oil and copper into deficit in the near- to-medium term, lending substantial support to prices and returns,” London-based Jeffrey Currie and other Goldman Sachs analysts wrote in the report.

Crude traded on the New York Mercantile Exchange will rise to $85 a barrel in the next three months, and copper for three- month delivery will climb to $7,000 a metric ton on the London Metal Exchange, Goldman Sachs said. The Organization for Economic Cooperation and Development said Sept. 11 its leading economic indicator suggests that a recovery is under way in most member nations.

Oil has more than doubled since 2000 and copper has tripled as a global economic expansion boosted demand. Prices rose to records last year, helped by imports into China and expectations that demand growth driven by the Asian nation would continue.

Crude fell 79 cents, or 1.1 percent, to $68.50 a barrel at 10:22 a.m. London time. Copper slid $120, or 1.9 percent, to $6,130 a ton.

Goldman Sachs maintained its forecast for oil to rise to $95 a barrel by the end of 2010. Copper will climb to $7,650 a ton by next year’s close, implying a 25 percent increase from current prices, the bank said last week.

Goldman Sachs cut forecasts for wheat and corn prices on expectations of larger inventories. Wheat will rise to $5.50 a bushel on the Chicago Board of Trade in the coming year, 12 percent less than $6.25 earlier projected, the bank said. Corn will gain to $4.50 a bushel, 14 percent below its prior estimate of $5.25, the report shows.

To contact the reporter on this story: Chanyaporn Chanjaroen in London at [email protected]