As we head into the final stretch of May and into the final month of the second quarter – Rapidly Surging Inflation, The Global Energy Shock, EV Revolution and Global Food Crisis are now emerging as the four biggest and most explosive macro themes driving the Commodities Supercycle.

One of the dominant themes of the current Commodity Supercycle that needs no introduction is rapidly surging global Inflation.

In the U.S, inflation is rising at its fastest pace in 41-years. In Australia, Canada and Europe inflation is at its highest level in 30-years. While in the UK inflation is now running at 9% – the highest level since 1982 and still accelerating.

If inflation continues to surge at the current pace across the world, then we’re only months away from a return to double-digit inflation on the same scale last seen in the 1970s.

As traders very well know – every 1% rise in inflation, ultimately equates to a 10% spike in Commodity prices.

With inflation now running between 8-9% across many of the world's major economies – it comes as no surprise that a total of 27 Commodities ranging from the metals, energies to soft commodities have tallied up astronomical double to triple digit gains, already within the first 5 month of 2022.

And this is just the beginning!

Elsewhere, the Global Energy Shock that is unfolding day by day could be one for the record books.

Last week, the energy markets took centre stage with Natural Gas prices surging back to all-time highs. Natural Gas price have now tripled since January – rallying from just under $3.50 to a current high of $8.54 – notching up a whopping gain of over 144%, so far this year.

The spectacular surge in prices has prompted traders to increase bullish calls for prices to soar further and hit new record highs by summer.

Another major theme of the Commodity Supercycle is the Global Food Crisis, which has positioned agriculture commodities as one of the hottest asset classes of 2022.

Since the days of the pandemic, farmers have faced a myriad of challenges including fertilizer shortages, drought and adverse weather, along with supply chain constraints and rising fuel prices cutting into transportation costs. Now the war in Ukraine has only exacerbated problems – sending agriculture prices across the board from Corn, Coffee, Soybean, Sugar, Wheat, Cotton to Lumber skyrocketing to multi-year and all-time record highs.

According to The World Bank – agriculture commodity prices could still surge another 60% this year from current levels and remain elevated well into 2024.

Last but not least is the EV and Green Energy Revolution. The switch towards a greener world is creating fresh demand for metals such as Aluminium, Copper, Cobalt, Nickel, Lithium, Platinum, Palladium, Uranium and Rare Earth metals.

As demand surges and the world needs more commodities and lots of them – there seems to be one big problem! Global supply is shrinking at a record pace off the back of a "triple deficit" – low inventories, low spare capacity and low investment.

The cumulative effects of these crises is fuelling an unstoppable Commodity Supercycle sending everything from the metals, energies to agriculture markets skyrocketing and positioning the entire sector as one of the most lucrative asset classes of this year, if not this decade.

A long list of leading Wall Street banks from Goldman Sachs, JPMorgan to Bank of America have described commodities as their “preferred asset class over the next decade”. This month, Warren Buffett, also joined that list – revealing that his biggest investment ever is currently riding on the Commodities Supercycle.

In the words of Warren Buffett, “the Commodity markets right now, represent one of the greatest generational opportunities of our lifetime, not to be missed.”

All in all, the evidence is mounting that a new Commodity Supercycle is underway. Whichever way you look at it, the case for Commodities in a well-diversified portfolio has never been more obvious than it is right now!

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:

Trading has large potential rewards, but also large potential risk and may not be suitable for all investors. The value of your investments and income may go down as well as up. You should not speculate with capital that you cannot afford to lose. Ensure you fully understand the risks and seek independent advice if necessary.

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD defends 1.0800 amid risk-aversion

EUR/USD defends 1.0800 amid risk-aversion

EUR/USD is holding ground above 1.0800 in European trading on Friday. The pair, however, stays undermined by the recent strength in the US Dollar on strong US PMI data and hawkish Fed expectations. Mid-tier US data and Fedspeak are next on tap. 

EUR/USD News

GBP/USD recovers to 1.2700 after downbeat UK Retail Sales-led dip

GBP/USD recovers to 1.2700 after downbeat UK Retail Sales-led dip

GBP/USD is trading close to 1.2700 in the European session on Friday, recovery ground after a brief dip, fuelled by a bigger-than-expected decline in the UK Retail Sales data for April. The pair remains on a corrective decline from two-month highs of 1.2761 on resurgent US Dollar demand. 

GBP/USD News

Gold pares losses on mounting geopolitical concerns

Gold pares losses on mounting geopolitical concerns

Gold puts in a temporary floor under the recent sell-off on Friday, trading a quarter of a percent higher at around the $2,330s, as a combination of market and geopolitical concerns lead investors to seek solace in its safe-haven qualities. 

Gold News

Why is Pepe meme coin rallying? What’s next after PEPE’s ATH? Premium

Why is Pepe meme coin rallying? What’s next after PEPE’s ATH?

Pepe price shows signs of continuing its uptrend, but it might come after a correction. This short-term pullback could be used by sidelined buyers to accumulate PEPE for the next leg up. 

Read more

Waning reflation appetite?

Waning reflation appetite?

The week hasn’t been pleasant for the market bulls. On Wednesday, the FOMC minutes showed the disturbing truth that ‘many’ Fed members wondered whether keeping the rates ‘high for longer’ was sufficiently restrictive to tame inflation.

Read more

Majors

Cryptocurrencies

Signatures