Top commodities outlook 2013 NASDAQ

Copper: the perfect backdrop

A quick glance at a two-year price chart for copper implies a troubled supply/demand backdrop.

Indeed, the moribund U.S. construction market has crimped demand for copper-intensive plumbing, as is surely the case in Europe as well. Yet the demand picture should improve in 2013, as commercial and residential construction is expected to move higher in the United States. Equally important, global copper production isn't keeping up, so a range of metals analysts say demand will exceed supply in 2013, 2014 and beyond. In the next part of this series of articles, I'll take a closer look at the copper fundamentals, and the best ways to invest in this multi-purpose metal.

Silver shines anew

Thespot price for silver is also well below recent highs: It surged to $48 an ounce in the spring of 2011 when the global economy flashed signs of an upturn, though it has fallen more than 30% since then. Often pursued along with gold as a safe haven in potentially inflationary times, silver has the added charm of rising industrial use. An improving global economy, coupled with a fairly tight supply backdrop, should help silver -- and the companies and ETFs involved in silver-mining -- to post fresh gains in 2013.

The farm belt rebound

The epic drought of 2012 led to reduced U.S. farm incomes, and a resulting pullback in spending on a range of agricultural chemicals and equipment. Will the drought persist in 2013? It's hard to know, but we can pinpoint the supply/demand picture for various farming inputs, and few have such a positive backdrop as fertilizer. In a subsequent article in this series, I'll pinpoint the fertilizer stocks with the greatest potential upside in 2013.

The broad-based play

Even as I dig deeper into copper, silver and fertilizer stocks, there's a particular stock that shouldn't be ignored when talking about commodities. It mines a wide range of metals, has a strong set of assets and deep financial flexibility, and remains quite undervalued even after a recent sell-off.

I'm talking about Teck Resources ( TCK ) , which sports a $20 billionmarket value and $10 billion in annual sales. Thecompany is a low-cost producer of copper, zinc and coal. This means the company can generate profits even as rivals must shutter higher-priced mines.

The real reason to focus on this stock: The value of all its mines, if acquired piecemeal by another mining firm, then it would cost the equivalent of $65 a share, according to analysis conducted by Merrill Lynch. In effect, you can own this company'sasset base for roughly half of the private market value. In a consolidating industry, that's a clear positive.

How about oil?

Wondering where oil fits into the 2013 commodities outlook? Signals about oil's direction are mixed right now. Some industry analysts say the world is over-supplied with oil, so oil prices will sharply recede once tensions in the Middle East recede. But others say a stronger U.S. economy in 2013 could boost demand, pushing oil toward the $125 a barrel mark. We'll likely need to wait until next spring to get a clearer read on the direction of oil prices.

Risks to Consider: As noted earlier, China drives commodity prices, and any major slowdown in that economy would force commodity prices lower.

Action to Take --> Commodities have been out of favor for much of 2012, thanks to global macro-economic concerns. Yet as the United States, China, Brazil and other economies expand in 2013, and as funds flow out of bonds, commodities could be a major beneficiary.

Source: NASDAQ http://www.nasdaq.com/article/the-best-commodities-to-own-in-2013-cm200123#.UQVv3HwgGK0