By Naveen Thukral and Mark Tay
SINGAPORE (Reuters) - Crude oil, rubber and metals are set to end 2016 with strong gains, bouncing back from several years of losses on output cuts and expectations of firmer demand.
Benchmark zinc <CMZN3>, steel rebar <SRBcv1> and rubber <JRUc6> have all rallied around 60 percent this year, while Brent crude <LCOc1> has climbed more than 50 percent.
Crude oil output cuts announced by OPEC, stronger-than-expected demand in top commodities market China and expectations of higher infrastructure spending in the United States after the victory of Republican candidate Donald Trump all boosted prices.
Looking forward, oil should gradually rise toward $60 a barrel by end-2017, a Reuters survey found, but gains could be capped by a strong dollar, rising U.S. exports and a possibility that some OPEC members adhere to agreed cuts.
"Accelerating non-OPEC (production) declines and OPEC's decision to cut were key to the rise in 2016," Energy Aspects analyst Nevyn Nah said, while robust demand growth also helped support prices.
"But the rebalancing process is still in its infancy and speculators want to position for that."
TOCOM rubber saw its biggest gain since 2009, a rally driven by higher oil and a weaker Japanese currency, which makes yen-denominated commodities cheaper for holders of other currencies.
Prices for steel rebar, used in construction, have soared more than 60 percent this year on better-than-expected spending on building and infrastructure and soaring costs for coking coal due to government-enforced coal mine closures.
"I expect the steel price rally to continue in the first half of 2017 when stock piling will be at a final phase and infrastructure construction programs will start," said Zhou Guangyan, steel analyst at Zhongcai Futures.
However, demand was likely to wane in the second half, with inventory at a new peak and the market feeling the effects of real estate regulations and potentially tighter monetary policy in China, he added.
Zinc, which is used in steel production, climbed to a nine-year peak last month with support from a series of mine closures that have tightened ore supply, fuelling a speculative rally.
For precious metals, gold is up more than 9 percent this year, snapping three years of losses as the market was lifted by a demand surge due to economic and political uncertainty.
However, the outlook is bearish as a rising U.S. dollar and higher interest rates, combined with strong equity markets, are expected to dampen demand for non-interest-paying bullion.
Agriculture had some of the worst performers in 2016, with Chicago wheat <Wv1> poised to post an annual loss of more than 13 percent due to all-time high global production.
Cocoa <CCc1> has given up almost 33 percent in its worst year since 1999 as the prospect of a global surplus kept the market on the defensive.
Palm oil <1FCPOc3> and soybeans <Sv1> were exceptions. Palm oil has added almost a quarter to its value after dry weather curbed output while beans are up 17 percent.
(Additional reporting by Muyu Xu in BEIJING and Swati Verma BENGALURU; Editing by Richard Pullin)