By Jorn Madslien
Business reporter, BBC News
Steel prices are set to rise as global manufacturing recovers
After a year of soaring commodity prices, next year is expected to see further increases, financial firms are predicting.
But the price rises will not be universal and the gains made by investors will probably be lower than they have been in recent months.
"In the first quarter of 2010, more buying is anticipated by consumers and institutional funds increasing their allocation to commodities," predicts Investec in a research note.
UBS Wealth Management agrees: "As to broad trends, we think the market should continue to favor commodities with an industrial demand backdrop and structural supply bottlenecks, as well as those with highly concentrated sources of supply," it says in a note.
Gold is a popular investment in turbulent markets
That means the price of iron is set to rise as industrial demand - particularly in China - picks up, according to Investec.
Precious metals - most notably gold, which hit a record high in November - will be popular as safe-haven investments by those cautions about the stock markets, with additional strong demand from Asian central banks further stoking prices
"For metals, the uptrend is still very much in place," agrees Galye Berry, an analyst at Barclays Capital.
India, China and neighbouring countries are expected to expand quicker than those in the developed world, so Asia is likely to provide the main engine for global growth next year, according to the International Monetary Fund (IMF).
Global food prices are expected to rise in the year ahead
Nomura forecasts global growth of 4.2% in 2010. "But developed world growth stands to be much weaker - 2% - than growth in emerging economies - 6%," the bank predicts.
Such economic growth is set to coincide with higher prices for rice and palm oil, pushed higher by bad weather, poor crops and rising demand.
"Sugar and corn [also] remain [well] supported by fundamentals," according to Investec - bankers' speak for rising prices.
Consequently, food prices are set to rise. This is set push up inflation in Asia where food accounts for about a third of the consumer price index.
Falling oil prices?
But the prices of some other commodities, oil in particular, are set to weaken in the months ahead, many market watchers say.
Many observers expect oil prices to slip over the next few months
Both the oil cartel Opec and the International Energy Agency (IEA) have raised their forecasts for oil demand next year, but they say economic growth and hence demand for oil is set to remain relatively subdued in the developed world.
Moreover, Investec adds, "increasing supply and rising stocks are likely to lead to prices falling".
"Given the cost dynamics of the industry, we expect the crude price to trade in a $55-$85 a barrel in 2010," Investec says, adding that it maintains its oil price forecast of $65 per barrel.
Oil prices are expected to fall from the current $75-$80 per barrel range to about $65 by next spring, agrees Nariman Behravesh, chief economist at IHG Global Insight - in line with a recent estimate by the World Bank predicting an average $63 a barrel next year.
Edward Meir, MF Global commodity analyst, blames "Opec's continuing refusal to tighten export quotas" and says "the ensuing price bias will be to the downside".
While fellow MF Global analyst Edward Meir says a strengthening US dollar is making oil more expensive for buyers outside the US.
"We suspect that [the dollar] will likely continue to strengthen into the year end and act as an overall drag on [oil] prices," he says.