We are generally quite neutral towards commodity prices on a short-term (three-to-six month) horizon. The broad-based gains since the start of 2016 have priced in most of the good fundamental news for commodity markets over 2016-2017, in our view.
Palm oil consumption in Africa and the Middle East will accelerate in the coming years and expand by a healthy growth rate. We are particularly positive on consumption in East and West African countries and believe Middle Eastern countries will show slightly more modest growth. South Africa will be the underperformer in terms of consumption growth.
We are positive towards commodity prices over a 12-month horizon and expect almost all to average higher year-on-year. In fact, we expect commodity prices to be one of the best performing asset classes over the coming quarters, boosted by both improving supply and demand fundamentals and rising global inflation.
With 2016 coming to an end, we highlight our key global views for the Food & Drink sector in 2017. It will be a difficult year for F&D majors, as they deal with declines in sales of traditional products in developed markets, as consumers move towards healthier, niche brands. Innovation and technology is playing a critical role in these markets, forcing the big companies to...
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