Commodity markets may see a depression in the near future due to heavy imbalances in supply and demand. Spot Index of 24 raw materials fell in December 83 percent since 1971with benchmarks showing negative growth up to November, as per Goldman Sachs Commodity Index. As a sign of this trend, investors globally are pulling out funds from commodities since last many months. Increase in crops production due to ample rainfall, increased metal outputs from mine and record extraction of crude oil by the US are some of the major factors that fuelled this trend.

As per the U.S government estimates, there will be a record harvest for corn this year and 95 percent of the U.S. harvest was complete as of Nov. 17. Since 1960, the corn production witnessed a biggest annual slump which resulted in the price getting toppled down by 39 percent. As per Goldman Sachs forecast in October, with a 17 percent decline, the prices of the precious metals will lead the list  and agricultural products will fall 8.1 percent. On speculation that Fed policy makers will take measures to reduce the Central Bank’s monthly bond purchases, gold is going to have its first annual decline over a decade. Due to its continued slow economic growth for the third consecutive year in 2013, China may reduce their investment in infrastructure development which will have a negative impact on the demand side of raw materials.

Sugar prices also may come down with the supply exceeding the demand. Globally, copper stocks under exchanges are also getting piled up with a 17 percent rise from last year. As per the U.S. Department of Agriculture forecasts, soybean production will hit an all time high this year. Due to favorable climate conditions in coffee producing countries like Brazil and Vietnam, coffee crops record productions is adding to this global trend. Thus, increase in the supply side of commodities due to favorable conditions and decrease in demand side due to slow pace in economic growth globally may lead to a bearish trend in the commodity markets in the ensuing days.