[Fishhead24]

07/31 03:14p CST DJ Bullish Outlook For Dow Jones-AIG Commodity Index -Analyst CHICAGO (Dow Jones)--The outlook for energy, gold and grain prices during the remainder of 2007 looks bullish as strong global demand is underpinning prices, analysts said. China's economic growth and weakness of the dollar are also adding support for commodities, the analysts said at the Dow Jones Indexes-AIG mid-year commodities outlook panel discussion sponsored by CME Group Inc. (CME). "Commodities have continued to expand in the mainstream investing world," said Dan Raab, managing director at AIG Financial Products Corp. AIG Financial Products is a unit of American International Group Inc. (AIG). The Dow Jones-AIG Commodity Index is up 2.27% this year and is estimated to have $38 billion tied to it by the end of the second quarter, compared to $23 billion in January 2006. Investors are looking to commodities as a way to diversify their portfolio, Raab said. Agriculture Corn, soybean and wheat prices at the Chicago Board of Trade are all expected to keep their bullish tones throughout the year as strong world demand and alternative energy sources lend support to prices, said Jack Scoville, vice president of Price Futures Group in Chicago. Wheat is leading the grains with recent prices reaching within $1 of the all-time high of $7.50 a bushel. Strong world demand in the face of adverse weather conditions in both the U.S. and in Europe. If the trends continue, it isn't unlikely that wheat could reach the record high, Scoville said. Tuesday September wheat settled at $6.30. The U.S. is seeing strong export sales in the face of low wheat supplies world wide, and Scoville expects the trend to continue. "I think the U.S. will be a primary source for wheat," Scoville said. "There's a decent chance that we could continue to see this rally move higher." Meanwhile, corn and soybean prices are both getting a boost in prices from alternative energies like ethanol and biodiesel. The demand for corn isn't expected to decrease anytime soon as long as government subsidies continue for ethanol. Scoville expects corn acreage in the U.S. to increase by at least 1 million acres next year. This year's planted acreage is 92.9 million. Earlier this year, corn prices hit more than 10-year highs, but since then prices have fallen from the $4-plus a bushel level. Near-term corn prices should reach seasonal lows around $3 within the coming weeks because farmers held onto their corn in anticipation of higher prices and because the corn acreage in the U.S. came in much higher than expected. But the continuing move toward ethanol is still providing a bullish outlook for corn through the year, Scoville said. CBOT December corn settled Tuesday at $3.42 1/4. "The market assumes the demand for ethanol will only increase over time," Scoville said. Soybeans will also be competing for acreage with both corn and wheat. Soybean prices are expected to stay higher through the year to keep Brazilian producers interested in planting soybeans. Demand for biodiesel will also lift soybeans, Scoville said. Considering the weaker dollar, Brazilian producers need to see CBOT prices of $8.50-$9 in order to make a profit with soybeans, Scoville said. November soybeans settled at $8.57 1/2 a bushel Tuesday. "Soy, for international reasons, will have to stay very strong," he said.