From the December 01, 2011 issue of Futures Magazine • Subscribe!

New year, same issues: Hot markets for 2012

Ag opportunities

In addition to gold and the euro, some analysts pointed to other commodities they expect to do well later in 2012, particularly the ags.

This year’s crop will be one of the tightest ending crops on record for corn, according to Patton, who says it should put a floor under corn. "There’s very little room for error in the 2012 crop. We always have weather or pest scares, so I’m expecting corn to be the strongest grain next year."

Additionally, Patton says strong and consistent demand for corn from China will provide additional support. Increasing demand for ethanol is another bullish factor making $5.50 a likely floor for corn in 2012. Although the crop isn’t even in the ground yet, he says corn could get back up to highs we saw earlier in 2011.

With such potential upside in corn, it’s no surprise that Rodock is watching live cattle very closely (see "Grazing cattle," below). "As we see supplies further out, some of the Cattle on Feed reports that we’ve seen have shown some weakness out into next year with a lower supply coming to market of feeder cattle that will be fat by that time," he says. Rodock is looking for live cattle to hit the $150 level.

Hackett also says live cattle are showing potential for the second half of 2012. "The first half of the year will see too much herd liquidation coming on the market. That eventually will lead to contraction of supply in the second half of the year," he says.

Finally, many analysts saw potential in the softs markets, where many commodities have experienced generational moves over the last two years (see "Are softs hitting a hard wall?" on the ). Among the softs commodities, Hackett expects coffee and cocoa to outperform a swath of others.

While 2011 proved to be a volatile year for markets because of constant geo-political factors, many of those same themes still will be in play in 2012. Although these factors can change significantly in a short period of time, their effects also can be ongoing for some time. New Year’s is a time for reflection and anticipation. It doesn’t take much reflection to see what lies ahead in 2012. More volatility!

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