* Commodities outperform equities so far in 2014
* Fuelled by rallies in natural gas, coffee, gold
* Bullish factors in agriculture, energy seen as temporary
By Eric Onstad
LONDON, Feb 26 (Reuters) - A new burst of investment in commodities after a hellish 2013 is expected to fizzle out in coming months, with investors alert to the fickle nature of rallies across basic resources such as gold and agriculture.
The 19-commodity Thomson Reuters/Core Commodity Index has gained 6.6 percent in February, its biggest monthly increase since October 2011, and up nearly 8 percent this year.
It has outperformed global equities, based on MSCI's all world index, which has flatlined so far in 2014.
The gain has been fuelled mainly by rallies in natural gas to five-year highs on a freezing U.S. winter, agriculture due to drought and gold on safe-haven buying following a capital flight from emerging markets and concern about global growth.
"We are slightly overweight (in commodities), and one of the reasons is these weather patterns," said Koen Straetmans, senior strategist at ING Investment Management in the Netherlands, managing some $240 billion of assets worldwide.
"There are a lot of specifics that have led to this relative good performance of the complex, but they might fade." Straetmans has a small position in commodities but holds a larger overweight position in equities.
While last year saw record outflows of commodity investment, so far in 2014 about $1.6 billion has entered the sector, Citigroup said.
Investors had fled commodities in recent years, with demand hit by the global economic crisis and slowing growth in the world's biggest consumer of raw materials, China.
"While this is hardly a strong V-shaped recovery given $50 billion in product net outflows for 2013, data are continuing to affirm our view that tepid 2014 investor flows would not be nearly as dire as last year," Citi analyst Aakash Doshi said in a note.
Much of the current investment flows are short-term bets by hedge funds or computer-driven funds based on momentum and technical indicators that could quickly reverse.
Long-term investors remain wary of the sector due to a still-fragile global economy and plentiful supplies of many commodities.
"You have momentum from systematic managers ... but it's not a strong move by investors into the commodity asset class. They are still reluctant," said Gabriel Garcin, a portfolio manager at Europanel Research & Alternative Asset Management in Paris, which invests in European hedge funds and Commodity Trading Advisors, also known as managed futures funds.
Graphic of commodities performance in 2014: link.reuters.com/reb25t
Graphic of asset performance in 2014: link.reuters.com/dub25t
The heaviest investment outflows last year were from gold exchange-traded funds (ETFs) as the price shed 28 percent, its biggest annual decline in 32 years.
Gold has bounced back so far this year, rising to its highest in four months on Wednesday, due to worries about economic conditions in the United States and China.
Turmoil in emerging markets (EM) could keep supporting gold in the short term, but once that abates, the metal might be vulnerable, Straetmans said.
"With global economic growth still being constructive and if EM stress can be contained, I would see it more on the negative side from here," he said.
There is also potential for weakness in the energy complex, said Ole Hansen, head of commodity strategy at Saxo Bank, adding that commodities were unlikely to keep outperforming other asset classes.
"What categorises some of these positive drivers is the temporary impact they represent, especially the energy sector where warmer weather and the U.S. refinery maintenance season are just around the corner," he said.
He said most of the bullish price impact in natural gas has been in the front month March, with April trading below.
Agriculture could also be exposed to reversals. A blistering rally in coffee spurred by drought in Brazil saw arabica soar 50 percent in the past month to 16-1/2-month peaks.
"Some of the (agricultural) commodity rallies have gone too far in our opinion, relative to actual supply/demand fundamentals. We still think a bearish trend will ensue over the balance of the quarter," Macquarie analyst Kona Haque said in a note.
"Ample production and replenished stocks will likely remain key bearish drivers for the agricultural and soft commodities."