Palladium, zinc and tin remain the top three commodity picks for 2017, with prices expected to rally strongly over our medium-term, all-in excess of 50% price gains, with palladium topping the charts at 90%.

Supply of each of these commodities is set to be squeezed and there are relatively few projects ready to be brought on stream in the interim. The current squeeze on project financing is making it less likely that new supply will come to market to fill future supply shortfalls.

Nickel finishes just out of the medals in the first compilation of 2013 in fourth, up two places from sixth in the Q4 2012 compilation. Cobalt and coking coal are strong upward movers this time around, both breaking into the top 10, placed in sixth and seventh respectively – behind alumina in fifth place.

For those unfamiliar with the CRU multi-commodity price forecast rankings, the mechanics of compiling the 2017 commodity outlook are as follows. Firstly, the respective CRU Group analysts across the various markets compile their forecast average mineral market prices for calendar 2017. Secondly, a recent reference date is chosen, set at the average price for the preceding quarter (here Q4 2012). Finally, a comparison of the 2017 to the reference level gives the directional indicator, whether a particular market will go up or down. Percentage price changes are ranked on a graded scale as to how ‘hot’ or ‘cold’ each commodity market will become. .

The usual words of caution apply at this juncture to avoid misinterpretation: A higher forecast for 2017 above prevailing prices does not imply a steadily rising commodity price over the intervening period. Likewise, a lower price in 2017 than the Q4 2012 benchmark does not imply a steady fall. Similarly, lower prices in 2017 do not automatically imply lower margins for all producers in that particular market, but do place greater focus on management to manage margins.

Looking to 2017, CRU sees more commodities due to experience substantial price increases: In the medium term, CRU expects the average of prices across the commodity basket of 22 markets to increase 13%. No doubt those familiar with commodity markets will avoid mistaking the mathematical precision of such a number with the intrinsic uncertainty implicit in such a forecast. Accuracy in any commodity price prediction to within a single percentage point is clearly not possible.

Twelve of 22 commodity prices will rise, while only nine will see price declines from the benchmark of 2012Q4. One market is set to record a similar price in 2017 to the 2012Q4 benchmark (urea, for the record).

While uncertainly is expected to support gold and silver prices in the short term, the return of market confidence and economic activity will depress prices for safe haven asset classes, with volatile silver sitting at the bottom of the heat chart.

Uranium prices remain under review, with no definitive forecast yet available to include in the average price basket analysis, other than a price rise in yellowcake is expected by 2017. For this reason, uranium is omitted from the formal rankings for the time being.

Here is the ranking table of mineral commodity price outcomes from highest to lowest in terms of movement in commodity price percentage. The 1-22 ranking combines the Q4 2012 average price as the baseline benchmark, then compares it with the latest available average 2017 price forecast. Conversely, the number in brackets next to each commodity refers to the previous ranking position (based on a Q3 2012 price benchmark and 2016 forecasts at that time).

1. Palladium (1)

2. Zinc (3)

3. Tin (2)

4. Nickel (6)

5. Alumina (5)

6. Cobalt (12)

7. Coking Coal (11)

8. Platinum (8)

9. Aluminium (7)

10. Lead (9)

11. Phosphate (13)

12. Manganese (15)

13. Urea (16)

14. Sulphuric Acid (17)

15. Copper (21)

16. Iron Ore (14)

17. Gold (18)

18. Ammonia (22)

19. Met Coke (19)

20. Sulphur (24)

21. Potash (20)

22. Silver (23)

Good hunting.

Allan Trench is a professor at Curtin Graduate School of Business and a research professor (value & risk) at the Centre for Exploration Targeting, University of Western Australia. He is also a non-executive director of several resource sector companies - and the Perth representative for CRU Strategies, a division of independent metals and mining advisory CRU Group (allan.trench@crugroup.com).

* With thanks to Peter Ghilchik, multi-commodity market analysis manager at CRU Group peter.ghilchik@crugroup.com