KUALA LUMPUR: In spite of the recessionary blues that are weighing on the global economic landscape, prices of commodities ranging from crude oil, gold to crude palm oil (CPO) and soybeans have been on the rise over the past few months.

The reason being demand is making a comeback amid fears of a shortage in supply of key commodities. For crude oil, supplies have been reduced by the Organisation of the Petroleum Exporting Countries (Opec).

In the case of palm oil, low production cycle and plantation players cutting back on the use of fertilisers have resulted in a drop in production.

In palm oil, independent cargo surveyors Intertek Agri Services estimated that Malaysia’s exports rose 1.7% month-on-month during the May 1-15 period to 624,052 tonnes while SGS (Malaysia) Bhd said in its survey that May 1-15 exports were up 8% on month to 629,364 tonnes.

Though international bodies such as the International Monetary Fund are predicting that global growth would contract 1.3%, prices of crude oil have surged more than 60% since the beginning of the year. CPO prices have gone up more than 100% since falling to a low of RM1,300 a tonne in October last year.

Thus, it was hardly surprising when investment guru Jim Rogers said investment opportunities remained in commodities.

“The only area of the world economy I know of where the fundamentals are improving is raw materials. The fundamentals for General Motors are not improving. The fundamentals for Citibank are not improving. The fundamentals for cotton are improving,” he was quoted as saying.

Could there be room for palm prices to go up? IOI Corporation Bhd’s executive chairman Tan Sri Lee Shin Cheng thinks so. He recently said the current warm spell could potentially push CPO prices to RM3,000 a tonne if overseas demand rose.

Recent data published by Oil World showed that soybean had a smaller-than-expected harvest in South America. This could see soybean prices, which had remained on the high side in the first quarter this year, to remain firm until the US farmers completed their soy plantings, HwangDBS Vickers said in a report.

“While we had been advocating higher soybean supply towards the end of the year would push prices down, they might not be able to fully replenish lower inventory caused by a draught earlier this year. Hence, there is a potential upside to our FY09 and FY10 forecast in soybean price of US$7.44 (RM26.41) per bushel,” it said.

Rogers predicted that prices would “go through the roof and we are going to have serious food shortage”.

“Gold and copper may rally massively with governments around the world printing a huge amount of money,” said Nassim Nicholas Taleb at a recent conference. Nassim is known for his discerning financial forecast and is the author of Black Swan.

The overall sentiment seems to reflect investors’ and market players’ optimism on commodities. As Rogers said, whether the economy rebounds or not, commodity prices would go up.