NEW YORK ( TheStreet) -- As economies around the world continue to grow and develop, commodities are likely to remain attractive and for good reason.
Emerging markets are anticipated to grow at exponential rates in the coming year. China is expected to grow at a rate greater than 8%; India is expected to grow close to 7%; and other nations in Africa and Latin America are expected to show some signs of prosperity as well. To add to this growth, developed nations like the United States are expected to grow, which will further bolster upward pressure on commodity prices.
In fact, supply-and-demand forces have already been putting pressure on commodity prices, evident through the recent uptick seen in the Baltic Dry Index. The BDI is an efficient indicator of future economic growth and production and measures the price of shipping dry bulk. As international demand of commodities increases, the price to ship dry bulk generally increases as well.
Another factor to consider is the growth and emergence of the middle class in developing nations. As incomes rise and some of these nations start to decouple from the West, the demand for more nutritious foods, better infrastructure and an overall improved way of life will likely follow.In fact, a recent study indicated that the demand for automobiles in China is surging and the purchases of tractors in India have been increasing at rates greater than 20%. These trends are also prevalent in parts of Latin America, Africa and Eastern Europe. The end result is an increase in demand for steel, rubber, fuel, oil, seed, fertilizer and other commodities. The trends will likely continue as populations in these regions of the world are expected to continue to increase.