Commodities ‘Super Cycle’ Is Over, Citigroup’s Morse Says
The “super cycle” of commodity prices gains has ended as China’s economy shifts to slower growth and supplies increase, according to Citigroup Inc. (C)
Prices won’t move “sharply” higher even as stimulus measures from global central banks lift growth and demand rebounds by the end of 2013, analysts led by New York-based Edward L. Morse, the bank’s global head of commodities research, said today in an e-mailed report. Returns will be more “differentiated” among raw materials depending on supply- demand balances, Citigroup said.
“It is now clear that the commodity super cycle is over,” Morse said. “No longer will a pure long-only strategy bring the returns expected in 2002 to 2008. Nor will conditions approximating those of the last decade return any time soon.”
The Standard & Poor’s GSCI Spot Index of 24 raw materials, which has increased almost fourfold since 2001, is up less than 1 percent this year as growth slowed in economies including China, the world’s biggest consumer of cotton, soybeans and copper. In week ended Nov. 13, money managers lowered bets on a commodity rally for a sixth straight week, the longest slump since the depths of the global recession four years ago, Commodity Futures Trading Commission data show.
To contact the reporter on this story: Joe Richter in New York at jrichter1@bloomberg.net
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net
Commodities ‘Super Cycle’ Is Over, Citigroup’s Morse Says
Asad Zaidi/Bloomberg
China is the world’s biggest consumer of cotton.
China is the world’s biggest consumer of cotton. Photographer: Asad Zaidi/Bloomberg
Nov. 19 (Bloomberg) -- Amrita Sen, chief oil analyst at Energy Aspects Ltd., discusses prices and supply amid rising tension in the Middle East. She speaks with Francine Lacqua on Bloomberg Television's "On the Move." (Source: Bloomberg)
Rate this Page
Bloomberg moderates all comments. Comments that are abusive or off-topic will not be posted to the site. Excessively long comments may be moderated as well. Bloomberg cannot facilitate requests to remove comments or explain individual moderation decisions.