Lower commodity prices seen as a buying opportunity

Even though the drop in commodity prices has been considerable some analysts claim that there might be some more to come. Some analysts expect commodity prices to drop 10 to 20 percent, but that the overall bullish trend in commodities will be intact and higher prices to follow. Any such drop would draw in new investors and fresh funds.

Most analysts point to the emerging middle classes of countries like India and China. These people are getting more and more demanding and the desire for luxury and better lifestyle has prompted the increased use of commodities, like oil and metals.

But even though these countries are not showing any strong signs of slowing down, a deep recession in the US could slow or even halt the exports from these emerging markets. That could have a drastic outcome for those economies slowing the advance of their middle class. High oil prices could also start to affect them, as is the case in India, where the government is cutting its subsidize program, resulting in higher oil prices. Higher oil and food prices added to lower exports could mean that these economies would be forced to slow down their expansion plans.

With lower prices to come, investors that missed out on the rise at the beginning of this year, could be tempted to enter the markets. This is seen as a potential boost to the bullish sentiment that has been dominating the commodity markets. The only thing that could slow such input into the markets, would be a stronger dollar.

A part from a stronger dollar and a deep recession in the US, the commodity markets are seen heading into a buying opportunity zone.