Are we witnessing a supercycle?

supercycle

The corona pandemic affected the economy of every city, state, country, and industry and they barely started to recover from it. It will take a lot of time, proper strategy, and efforts to bring back the economy of a particular industry to where it was. As the industries are starting to recover from that the prices of commodities are rising day by day. But the question that arises here in the mind of commodity traders is that will the price of these commodities stay relevant or will it go back to normal pricing? Here in this article, Roman Dawidowicz will tell you everything you need to know about commodity pricing. 

Factors affecting Commodity pricing 

Traders are being benefited from the rise in commodity pricing as the pricing of commodities are rising day by day, for example, crude Brent prices have an increase of almost 40% which is all-time high pricing. Not only crude Brent but from the beginning of January timber, iron ore, and many other minerals have hit all-time high prices this year. Some traders are thinking that the new “supercycle ” has begun, in the supercycle the prices of commodities stay elevated throughout the year. But to maximize this opportunity investors and traders must judge if the price will stay relevant or not throughout the year. 

Why is the pricing of commodities rising? 

There are some questions that we need to answer and one of the most asked questions is what is causing the price of commodities to rise? The answer to this question is the pandemic, this pandemic has directly or indirectly affected our lives and the situation of the market. The prices before the pandemic were artificially low but the lockdowns that occurred during the pandemic has created shortage in supplies that resulted in the prices being high. The lockdown around the globe disrupted the mining activities all around the world that resulted in shortage of minerals and commodities and companies being insufficient to meet the demand of the market. Another reason being the countries that are developing infrastructure at an abnormal rate and to meet such high demand of natural resources countries are spending trillions of dollars to buy these resources which is resulting in the shortage of these resources and highly rising prices. 

Most beneficial commodities to present in the market right now 

The technology around us is growing day by day, more and more people are starting to transit from petrol/diesel-powered vehicles to electric-powered vehicles. This is opening up a new market for metals such as lithium, cobalt, these are used to make high power and efficient batteries. Not only these but major agricultural commodities have been on the rise since the lockdown occurred and they are at an all time high price. The Price of oil is rising whether Crude or edible oils, soya, vanaspati, palm ,sunflower. This can be of great worry as many countries import a large quantity of them to use .The increase in popularity of these commodities is making them favorites to become the most beneficial commodities to watch out for in the future. 

Supercycle and its concerns 

This is still debatable whether we are witnessing a supercycle or not. There is a bit of confusion going on, some markets are clearly benefiting from it, but there are some markets that are facing huge trouble like the copper market that is hitting its worst week in more than a year. Many agricultural commodities are facing troubles with improving weather soybean market is facing a loss of 11% which can be quoted as its worst performance in the last 7 years. Many metals are facing losses in metal exchange markets which is the topic of the biggest worries. The change in the weather is also playing a major role in the pricing of agricultural commodities as there are not enough crops to harvest to meet the demand of the world supply. Drought-like conditions in Russia and Ukraine are making it nearly impossible to meet the demand of sunflowers which is a big concern for the price of the commodities.  

The supercycle is beneficial for some traders and investors but the biggest question in the commodity market right now is that will the prices of the commodities stay relevant over the course of time? Or will they drop? The market is changing its position every hour and it is still very unclear that we are facing a supercycle or not. For some markets it is beneficial and for some traders and markets, it is not beneficial. There is a continuous loss for soybean oil slid markets as the prices are being affected. In the above article, Roman Zenon Dawidowicz talked about whether we are witnessing a commodity supercycle or not and everything you need to know about it.

Roman Zenon Dawidowicz is an Intermediate Mandarin speaker with Taiwanese qualifications and over 12 years of experience in the grain and oilseeds physical markets in a global origin/destination. Looking for business, procurement and business development, job opportunities within Switzerland, Dubai and Asia.

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