Is the commodity supercycle dead?

Commodities have performed poorly against stocks over the last year. But the sector is still a potent hedge against uncertain inflation.

From the late 1990s until the 2008 financial crisis, most commodities experienced double-digit annual real (ie, inflation-adjusted) price growth, a period known as the commodity “supercycle.” The price of oil rose 1,062 per cent, copper rose 487 per cent and corn rose 240 per cent as growing emerging market demand finally caught up with years of underinvestment in various commodity markets, according to Bloomberg data. But poor relative performance of commodities to equities year to date has led to some media reports that read like an obituary for the commodity markets. The Economist has even suggested that it is oil demand, rather than oil production, that has peaked and will decline, particularly now that shale has emerged as a viable source of supplies.


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