Commods may surprise to upside: Goldman's Cohen

NEW YORK (Reuters) - The recent sell-off in industrial commodities may have been sharper than investors expected but they could stage an equally surprising rebound if emerging nations continue to rapidly build infrastructure, a strategist for top commodities trader Goldman Sachs said on Wednesday.

The global economy, which drove base metals markets to multi-month lows this week and weighed on oil prices, could become a boon to industrial commodities in the next 12 months, Abby Joseph Cohen, senior U.S. investment strategist for Goldman, said at the Reuters Investment Outlook Summit in New York.

"Our view is that commodity prices will be rising again," Cohen said. Goldman's latest monthly forecast projects a 23 percent rise in energy prices over the next year and 6 percent growth for base metals such as copper, aluminum, zinc, nickel and tin.

Goldman, the No. 1 investment bank and commodities trader on Wall Street, expects prices of precious metals such as gold to rose 17 percent over the next 12 months. Gold hit record highs above $1,250 an ounce this week. Goldman is only bearish on agriculture, which it expects to contract by 1 percent over the next year.

For industrial commodities particularly, infrastructure growth in the BRIC nations -- comprising Brazil, Russia, India and China -- will be key, Cohen said.

"The demand globally for commodities may surprise ... because the growth of the economy in those nations may understate the need for certain commodities like industrial metals," Cohen said. "If you are building new cities, if you are building transportation systems, you need more of these materials than you otherwise would."

Crude prices were up almost 4 percent in New York on Wednesday after an unexpected drawdown in oil stockpiles in the United States -- the world's No. 1 energy consumer. Oil prices were down about 10 percent on the year earlier this week.

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Copper prices also rebounded on Wednesday, rising almost 3 percent in New York and London, after unofficial data showed strong growth in exports by top metals consumer China <MET/L>. Copper had been down 20 percent on the year just two sessions ago on fears that the European debt crisis could lead to a double-dip recession.

Cohen said she does not see a double-dip recession, but she expects U.S. economic growth will slow in the second half of 2010, primarily because of a drag in creating new employment to replace the millions of jobs lost during the recession.

However, she said U.S. banks were no longer tightening lending conditions for small- and medium-sized businesses and that federal interest rates were likely to stay low for a long time -- all good signs for businesses and their demand for basic resources like commodities.

Inventories of some commodities were also falling faster than supply could come on board.

"We also haven't really seen very much investment in the way of petroleum infrastructure for many years and there is not very much spare capacity," she said.

(Editing by Leslie Adler)