The Outlook for commodities in 2008 suggests that prices could continue to rise.
Commodities such as precious metals, provide a good investment alternative to volatile financial markets. With problems in credit markets predicted to continue, metals will provide an alternative for global investors increasingly looking to diversify.
The price of agricultural commodities have risen after decades of real price falls. This in part reflects constraints on supply and growing demand. Environmental factors have caused desertification and falling crop yields; these factors have helped to push up prices.
Demand has also been rising due to global economic growth of 4.5% and American production of crops for ethanol.
The China and India Effect.
The quick development of China and India has placed higher demand for a range of commodities essential to growth.
Prospects for Coffee
Coffee is the second most traded commodity in the world. Coffee reserves are now less than 13pc of annual global consumption. This is the lowest level ever recorded. If there are any seasonal factors which reduce supply of coffee we can expect prices to rise rapidly. Demand for coffee continues to rise from both developing and developed countries.