How would you project the future price of commodities? In investment banking, we would look at wall street research reports and get an "average" but I am looking for a more "fundamental" approach. How do the research analysts themselves project commodities prices?
I am doing this for an investment idea that I plan to pitch for hedge fund interviews. I am pitching a commodity stock and I anticipate one question would be what I expect future prices for this commodity to be and how I arrived at it, and I don't think it is acceptable for me to say that I got it from wall street research reports. Correct me if I am wrong though.
Commodity prices are driven by macro factors of supply and demand along with changes in the money supply. Rather than me go through the basics of economics and commodity prices do a google search. Seeking alpha also has had some good commentary. If you are going to pitch a commodity stock I would start big picture (inflation, supply/demand, countries driving the commodity i.e. BRIC) and then go into the earnings expectations, industry/geographical competition, etc.)
How about futures prices? In theory, your first best guess.
most commodities have a future forward price curve... using this would be the most rational way of projecting a comoodity's price because it's market-dictated
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