In the world of commodities, 2010 holds a lot of promise for investors. The

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year 2009 was primarily taken over by the bulls, leaving most of the commodities in the positive zone. FC Invest spoke to analysts to find out the outlook for the five most prospective commodities in the New Year.

Among the group of precious metals, silver was the best performer on the National Commodity and Derivatives Exchange, as it surged more than 51 per cent in 2009. On the other side, gold added 24 per cent during the same period. Both of the metals touched never seen before levels.

“Silver stole the limelight from gold’s performance last year and will continue to do so in 2010, as the white metal is responding to the prospect of a surge in industrial demand” said Amar Singh, head of commodities at Angel Broking.

According to Tarun Satsangi, assistant vice-president at Bonanza Commodity, “A key reason behind the sharp rise in silver prices is the weakness in dollar since the first quarter of the year. In addition, buying of gold by central banks of various countries and the rise in investment demand supported precious metal prices, which touched an all-time high during 2009.”

Demand for silver this year is expected to rebound to normal levels, as the emergence of key new markets for the white metal are expected to further boost prices.

The base metal group traded firm throughout calendar 2009. The rise in the demand from China, the largest consumer of metals, and the more than expected pace of global recovery, a sign of further rise in demand from major consumers, reflected on the prices of metals. The prices of each metal in this segment at least doubled. Copper and zinc rose more than 119 per cent each.

According to Anand James, senior analyst at Geojit Comtrade, “The recent surge in zinc prices could be attributed to restocking by steel mills in anticipation of a rise in steel demand by way of infrastructure growth. Zinc is widely used for galvanising steel.”

However, the supply situation paints a different story. The global zinc market was in surplus by 403,000 tonnes in the first 10 months of 2009, according to the Lisbon-based International Lead and Zinc Study Group's (ILZSG) monthly bulletin.

As far as spices are concerned, lower production estimates supported prices in 2009. Turmeric was up 177 per cent last year, while the rest gave good returns of about 30-35 per cent, except coriander, which dipped around 21 per cent during the year.

“As per the present scenario, it is not advisable to invest in spices until the commencement of fresh arrivals during February 2010. We are not yet clear about the production figures for 2010 in different countries, the carry-over stock for 2010 as well as consumption estimates. Moreover, prices are not corresponding with the prevailing fundamental factors in the market and speculative activities have taken over the price movement,” Satsangi added.

Analysts believe that in 2010, domestic production and consumption of turmeric might remain at 53 lakh bags and 55 lakh bags, respectively. On the oil front, prices have fallen by more than 70 per cent since its July 11, 2008 peak at $147.27, to touch a low of $32.4 in just five months in Dec-ember 2008 on the back of a slowdown in demand because of global recession. However, prices spr-ang back in 2009 and recorded a sharp recovery to $82 from the low of $32.4, because of the rise in demand from China, West Asia and other Asian countries. A better than expected economic recovery in 2009 also supported prices. According to analysts, the Indian and global demand of crude oil may touch the level of 3,250 thousand barrels per day and 85,220 thousand barrels per day in 2010.