Risks still on downside but prices looking more reasonable

After two to three years of generally poor performance, many commodity prices have now fallen to levels that are starting to appear attractive again. We still think the near-term risks generally lie on the downside, especially for industrial metals and key agriculturals where supply should be ample to meet increased demand. Oil prices are unsustainably high too. But the prospects for the global economy are a little healthier and monetary policy is set to remain relatively loose across the developed world. Precious metals probably still offer most upside.