Australian (ASX) Stock Market Forum

Commodities Super Cycle - Do you believe in it?

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Sean K said:
You're holding a lot of stocks there, Frogster.
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Not sure i get you ?these were discretionary asx stocks on mostly PM related area.
only a few and my systems are with different broker: 30 or so stocks now as heavily in cash overall
The coloured squares chart was an image of day changes on the whole asx200..not my portfolio ?
 
Dona Ferentes said:
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An interesting feature of the present price booms in so many commodities is their supply constraints rather than overwhelming demand. Covid has clearly had a massive impact on supply in most sectors, and now the Ukranian crisis will amplify that trend.
Oil has not yet rebounded as North American unconventional oil remains well below pre-pandemic levels, while coal supply is being hit by ethical considerations and lack of banking industry support for new projects.
New energy metals are the exception, and in the case of copper and nickel which take many years to ramp up supply, their price strength looks assured for many years to come.
At a global level we are not in a cycle of comparative strong industrial growth as few post-covid (are we there yet) stimulus measures have been enacted.
Apart from the above, China has driven iron ore prices to record highs in the past year, but outside of China few nations are doing much to add to significant commodity demand.
 
rederob said:
An interesting feature of the present price booms in so many commodities is their supply constraints rather than overwhelming demand. Covid has clearly had a massive impact on supply in most sectors, and now the Ukranian crisis will amplify that trend.
Oil has not yet rebounded as North American unconventional oil remains well below pre-pandemic levels, while coal supply is being hit by ethical considerations and lack of banking industry support for new projects.
New energy metals are the exception, and in the case of copper and nickel which take many years to ramp up supply, their price strength looks assured for many years to come.
At a global level we are not in a cycle of comparative strong industrial growth as few post-covid (are we there yet) stimulus measures have been enacted.
Apart from the above, China has driven iron ore prices to record highs in the past year, but outside of China few nations are doing much to add to significant commodity demand.
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remember current ( official ) US policy is to further restrict the development/use of unconventional oil , so it is also creating it's share of the problem ( not to mention funding unrest in other oil-producing nations )
 
so do we consider this to be a true commodity super-cycle or an artificial device to suit a different agenda
 
divs4ever said:
so do we consider this to be a true commodity super-cycle or an artificial device to suit a different agenda
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I would call it an accidental boom.
Ideally we want strong global-level industrial production to drive broad based commodity demand.
Covid exacerbates some data as 2020 production levels were suppressed, making 2021 data looking really good as it has come off a low base. It also has had an effect on supply in that many sectors are yet to return to pre-pandemic levels, so prices have been driven higher while demand has struggled to return to 2019 levels.
 
Freight Waves, the global supply chain magazine, ..... last week [ ] argued that "the second Cold War is here" and entire supply chains will be re-written as a consequence.

"We are witnessing the remaking of the world order in front of our eyes, and this will impact global supply chains in unforeseen ways," Freight Waves chief executive Craig Fuller wrote.
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"We are about to experience the most dramatic and unpredictable supply chain map we've experienced since World War II. "If the Russia-Ukraine conflict's international ramifications keep spreading, we face a real possibility of a bifurcating global economy, in which geopolitical alliances, energy and food flows, currency systems, and trade lanes could split."
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Mr Fuller predicted Western companies would start to shift sourcing away from the "East" and more toward Western and neutral states.
"North American economic integration will become a new priority," he said. "Surface transportation across the Eurasian continent will become more complex, and possibly contested.
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"Entire supply chains will be rewritten, with new sources and partners, all in the interest of corporate and national security. "The future market winners will be the corporations that make the investments in supply chain infrastructure and reliable, Western-friendly production locations.....:
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-but it won't happen overnight. Nor will restoration of trust between players. As @redrob said it is a bit of an accidental boom, if only because of realignment of supply lines, and only for some sectors.

www.abc.net.au

Why global supply chains will be re-written by the 'second Cold War'

The Russia-Ukraine conflict could blow apart the global economic order, including its supply chains, writes Gareth Hutchens.
www.abc.net.au www.abc.net.au
 
rederob said:
I would call it an accidental boom.
Ideally we want strong global-level industrial production to drive broad based commodity demand.
Covid exacerbates some data as 2020 production levels were suppressed, making 2021 data looking really good as it has come off a low base. It also has had an effect on supply in that many sectors are yet to return to pre-pandemic levels, so prices have been driven higher while demand has struggled to return to 2019 levels.
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i was more thinking the value of currencies ( all of them ) declining ( in real purchasing power ) putting pressure on costs ( whether it is staff costs , reduced productivity per hour worked , compliance costs )

i am watching as more and more miners trying for a 'hub and spoke ' development model , and would not be shocked to see it become more popular in agriculture as well , ( and easy credit fueling these plans )

since this appears to be an unnatural extension of the mining cycle , what brings this back to earth .. insane energy costs , more supply chain disruptions , a credit crunch , or just a lack of capable staff ,or we start feeling the bite of sanctions ( boycotts from China or elsewhere )
 
waterbottle said:
Yes.

Supply of commodities has been reduced - Russia and Ukraine can no longer sell to the West.
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but more than just those two , Brazil had the tailings dam failures , civil unrest in a few other places ( not just Africa ) i feel this started before the virus outbreak , but the virus issues added acceleration , and now we have 'war rumblings '
 
divs4ever said:
but more than just those two , Brazil had the tailings dam failures , civil unrest in a few other places ( not just Africa ) i feel this started before the virus outbreak , but the virus issues added acceleration , and now we have 'war rumblings '
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Agreed.

Western suppliers offer stability during a period of unstable geopolitics and fragile supply chains.

Definitely a boom cycle IMO
 
having had the odd boil in my younger days , i wonder when it will go back to normal and how much pain will that cause

( the twisted logic behind my buying into a decline and reducing cash invested in the larger rallies )

some will have noticed my penchant to 'free-carry ' so when a rally looks to be overdone i can calmly decide IF and how much profit i should crystallize

my long term aim is to have stock-market exposure with minimal investment cash risk ( apart from the ravages of inflation ) and still receive some div. income along the way

and yes i have often foregone extra capital gains ( and had extra brokerage costs )

but what is relative novice to do in a tumultuous market and i NEED i future income
 
I quite like the comment in Jarad Dillian's newsletter, The 10th Man
One theme I have been harping on [about] ... is that commodities tend to make V tops, and stocks tend to make V bottoms. But when stocks top, they make big, rounded U tops, and when commodities bottom, they make big, rounded U bottoms (the oil bottom in 2020 is the exception, where prices went negative).

We’re seeing a lot of V tops in commodities, and correspondingly, we’re going to see a V bottom in stocks.
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Ties in with my view, that I'd rather be roughly right than exactly wrong.
 
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