(Corrects to December 2011, from 2012, in final paragraph)
* Commodity volatility whipsaws Thomson Reuters-Jefferies
* Mideast violence, U.S. budget worries yank oil prices
* South African mine violence propels gold
By Susan Thomas and Veronica Brown
LONDON, Jan 11 Drought, recession and political
upheaval rocked commodity markets and confounded price
forecasters last year, but at least some got it right, even if
guess-work sometimes overtook mathematical calculations.
At the start of 2012, no one could have foreseen the drought
that decimated a historically high planted area for U.S. corn,
or deadly violence in the Middle East and in South Africa's
mining sector, or the extent of China's economic slowdown.
A brutal sell-off in May across markets last year pulled the
Thomson Reuters-Jefferies CRB index for commodities
down 11 percent that month, followed by a violent snap-back in
June, and a fall of more than 3 percent for the year.
Funds and banks trading a whipsawing oil price struggled.
Heightened worries about the U.S. budget talks weighed on prices
just as Iran's nuclear programme and violence in Syria supported
prices, making for volatile trading.
In 2012, oil prices averaged $111.68 per barrel for Brent
and $94.15 per barrel for WTI, and most of the
bigger banks who participated in a Reuters poll last January got
But a Portuguese commercial bank, Banco BPI, with
a market capitalization of less than $2 billion, was right with
its forecast of $112 for Brent and $94 for WTI.
"At the start of 2012 we were a little pessimistic because
we knew that China would see a drop in growth....focused on what
kind of slowdown it will face," Banco BPI analyst Agostinho Leal
Alves said. "In the end, it was a soft landing."
For 2013, he sees Brent averaging $118 and WTI $102 on
expectations of higher economic growth in China and the United
States, as well as conflicts in the Middle East.
Gold had a tumultuous 2012 but still eked out a 12th
successive year of gains, even as some investors headed for the
exit due to indecision over the market's status as a safe-haven
from economic volatility caused by Europe's debt crisis and U.S.
A super-low global interest rate environment and additional
policy easing from leading central banks proved key.
Even without another outright record high, gold prices
averaged $1,668 per ounce last year, based on the Reuters
spot closing price. The forecast from Michael Wagner at
Volkswagen AG was closest at $1,675 per ounce.
The London Bullion Market Association's (LBMA) arch
soothsayer Ross Norman, having been the most accurate in the
metal's more than decade-long bull-run, admitted that getting it
right is no longer a pure number-crunching exercise.
"To get a full sense of where the market is going now is
less of a science and more of an art. It seems to be driven more
by sentiment than hard data," he said.
The uncertain outlook for the global economy, coupled with
sluggish demand from top commodities consumer China, drew a
consensus for a small rise in the copper price last year from 32
analysts surveyed in a Reuters poll last January.
But many of those surveyed were not pessimistic enough. The
consensus showed the cash copper price would average
$8,369 a tonne last year, around $400 higher than the final 2012
average of $7,958.
Societe Generale, however, was almost bang on with its
prediction of an average cash copper price of $7,950. The bank
sees the average cash price slightly higher at $7,975 this year.
"In the first half we see a rebound in China," Societe
Generale analyst Robin Bhar said.
"That may start to hit structural head winds in the second
half as China transitions from export-led economy to being
domestically led, trying to encourage domestic demand. That
could maybe slow the economy in the second half."
The U.S. drought propelled wheat prices up 40 percent
between mid-June and July, and corn more than 60 percent between
June and mid-August, wrong-footing most 2012 forecasts by
analysts who participated in a poll at the beginning of last
year. [I D :nL2E8CU3QE]
The final spot CBOT corn price on Dec. 31 last year
was $6.98-1/4 per bushel, wheat was $7.78 per bushel, and
soybeans was $14.18-3/4 per bushel.
Tim Hannagan, who was at PFG Best at the time of the Reuters
survey, had the closest forecast for an end-year price for corn
at $5.90, or $1.08 below the final price. Reuters agricultural
commodity polls are all based on end-year prices.
Hannagan, now a grain specialist for Alpari US LLC, said he
was lowering his corn price outlook for end-2013.
"Based on what I think plantings and weather will be and
based on the current administration's policies, without any
major surprise I'm looking at $5.30," Hannagan said.
For wheat, Chris Manns, president of Chicago brokerage
Traders Group Inc, was the closest with his prediction of
$8.30, or 52 cents above the final price.
For end-2013, Manns forecasts a wheat price of $7.50, near
its current level.
"I get the feeling there is going to be a lot of wheat
around. I know Australia is drying out a little bit, but the old
adage says 'wheat is a weed'," Manns said.
"In this country (the United States), it's not looking too
good either. But I think we are going to see a lot of wheat
For soybeans, Goldman Sachs had the most accurate forecast
at $12.15, or $2.03 under the final price.
The winner on coffee was J. Ganes Consulting LCC with a
forecast in a January 2012 poll for an end-year price for ICE
spot arabica coffee futures of 175 cents a lb. The
end-year price was 143.80 cents. [C OF /POLL]
"The market is starting to dig into levels that should
provide some underpinning and I would expect the downward slide
to subside," Judy Ganes-Chase said.
She added that a large Brazil crop and unsold coffee "is
still a negative feature" and forecast coffee at $1.45 per lb at
the end of the first quarter and $1.40 at the end of 2013.
For sugar, Julio Borges of JOB Economia was most
accurate with an end-year price of 20 cents. The actual end-year
price was 19.51 cents. [I D :nL6E8CK21B]
The average price of EU carbon permits (EUAs) in 2012 was
7.50 euros. Deutsche Bank and Schwarzthal Capital both forecast
8 euros for 2012 in a December 2011 poll.
(Reporting by Susan Thomas, Veronica Brown, Nigel Hunt, Dmitry
Zhdannikov, Julie Ingwersen, Sam Nelson, Marcy Nicholson, Jan
Harvey; editing by Keiron Henderson)