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

November 19, 2012

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. (C:US)

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

To contact the editor responsible for this story: Steve Stroth at

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