Commods rebound not 1-way ride: Cohen

NEW YORK (Reuters) - The rebound in commodity prices is unlikely to go one way, just as the U.S. economy is not likely to see a V-shaped recovery, Goldman Sachs (GS.N) senior investment strategist Abby Joseph Cohen said on Monday.

"We think what's a mistake in commodities, the way it is in stock prices if anything else, is to think it's unidirectional. It's a trading range," Cohen told the Reuters Investment Outlook Summit in New York.

Oil, metals and grains prices are trading at or near multimonth highs amid signs of improvement in the economy.

"You have to ask whether the price to which they got was the appropriate price," Cohen said.

"This is not going to be a V-shaped recovery," she said, referring to the U.S. economy. "For two or three quarters, it might look like a V-shaped recovery. In some industries, you may, in fact, see that because the production will need to pick up even more dramatically than the improvement in demand."

Since the end of February, crude prices have jumped nearly 75 percent and tin prices are up 35 percent, while corn, wheat and soybean prices are up about 25 percent. This has led to talk of a bubble forming again in commodities, similar to the one seen until late last year before the recession hit.

Some analysts suspect the rebound has little to do with fundamentals and is influenced more by big Wall Street banks executing large proprietary trading in commodities and routinely issuing prices forecasts and analyses that are closely followed by investors.

Despite weak oil demand and strong inventory levels, Goldman Sachs recently raised its end-2009 oil price forecast to $85 a barrel, predicting tighter fundamentals in the second half due to economic recovery and lower supply due to cutbacks by producer group OPEC.

Michael Masters, a hedge fund manager, told a congressional panel earlier this month that commodity prices again appeared to be determined by trading desks at large Wall Street firms, and not supply and demand.

Cohen declined to comment on that view.

But she said energy prices, in particular, had several variables to them.

"If in fact the global economy is coming out of recession, ... we have an interesting situation where demand will be increasing, but supply won't be," she said. "Non-OPEC supply of oil is probably not going to be increasing very much."

"Our sense is that, as always, commodities will trade in a volatile fashion."

(Reporting by Barani Krishnan; editing by Jeffrey Benkoe)