Monday, November 19, 2012

Commodities Climb to 4-Week High As Citigroup Calls the End of the Commodities Supercycle

If ten years marks a "Supercycle" what do you call a generation? A Super-Duper Cycle? A Super-Mega-Grande-Vente cycle?
From Bloomberg:
Commodities rose to a four-week high on optimism that a deal will be reached to avoid automatic U.S. spending cuts and tax increases, boosting the outlook for economic growth and demand for metals, energy and grains.

The Standard & Poor’s GSCI Spot Index of 24 raw materials rose as much 2.3 percent to 651.75, the highest since Oct. 22. Gains were led by sugar, which jumped the most since June. Oil reached the highest in four weeks amid concern that unrest in the Middle East will disrupt supplies. Copper climbed the most in nine weeks.

Commodities erased their 2012 loss after President Barack Obama said yesterday he’s “confident” about reaching an budget agreement with lawmakers to avoid the $607 so-called fiscal cliff. A group of European finance officials met in Paris today to try to forge a common position on Greece’s next aid payment. Sales of previously owned U.S. homes climbed in October, a private report showed....MORE
And again:
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.”...MORE