Commodities ‘Super Cycle’ Is Over, Citigroup’s Morse Says

Commodities ‘Super Cycle’ Is Over, Citigroup’s Morse Says
China is the world’s biggest consumer of cotton. Photographer: Asad Zaidi/Bloomberg

The “super cycle” of commodity prices gains has ended as China’s economy shifts to slower growth and supplies increase, according to Citigroup Inc.

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.

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