Pension funds will shift their focus towards commodities in the wake of continuing drop in the dollar, and surging demand for raw materials coming from the expanding Chinese economy, says Tudor Investment Corp. strategist Steve Mathews said.

``The thinking in commodity markets is that these people have long-term horizons and won’t leave the market as quickly as some other traders might,’’ Mathews, who manages commodity investments for the Greenwich, Connecticut-based hedge fund, said yesterday in an interview. ``It could drive up prices.’’

U.S. retirement funds have over $25 trillion in assets, with $40 billion invested in commodities. The range of commodities goes from oil to copper to soybeans.

In his presentation at meeting of the Society for the Investigation of Recurring Events, Matthews said that investment in commodities ``could increase quite a bit, and it looks like it will.’’

The good news for those invested in commodities is the record annual growth in China that hit 9.5% in the first nine months of 2004, after reaching the annual rate of 9.3% in 2003, turning the country in the world’s biggest buyer of copper and soybeans. The expected yuan revaluation might raise the demand for commodities even further, giving Chinese consumers more buying power.

The Goldman Sachs Commodity Index including 24 raw materials added 17% in 2004. Oil prices rose 34%.