5 July 2021

Investors forecast commodities trading surge as supercycle kicks in

Professional investors are forecasting a surge in commodities trading over the next 12 months as the so-called commodity supercycle takes effect, new global research from blockchain-based derivatives trading platform CloseCross shows.

Person examining a price chart online
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Its research among professional investors around the world responsible for around US$380bln in assets under management, found 84% expect the level of trading in commodities to increase in the year ahead with 29% forecasting a substantial increase.

A key driver is that 81% of them believe markets are entering a commodity supercycle where commodities trade above their long-term price trend for decades-long periods, the study found.

The professional investors, who include hedge funds, wealth managers, institutional investors, fund managers and independent financial advisors, point to a boom In Government spending worldwide as economies recover from the COVID-19 pandemic as the biggest reason for the commodity supercycle.

Around 80% highlight Government spending while 77% point to bets on the greening of the world economy lifting commodity prices and 61% believe strong demand from China is fuelling the supercycle. The weakness of the US dollar was cited by 53% while 29% point to low interest rates as a reason.

And the winner is?
Around a third (32%) believe industrial metals will see the biggest price rises over the year ahead while 27% say precious metals will be the biggest price winners. However, 22% believe the biggest price rises will be seen in oil while 13% forecast strong growth in natural gas prices and 7% point to agriculture as the best sector.

The survey was carried out by independent research company PureProfile, which interviewed 101 professional investors in France, Germany, Hong Kong, Singapore, UAE, Qatar, India, the US, and the UK in June 2021 using an online methodology