Expectations of commodities supercycle could be misplaced

EASY-MONEY policies and a rebound in global activity as the Covid-19 vaccine coverage widens have led commodities from crude oil and gold to silver, copper and iron ore to rally this year, with pundits expecting more "wind in the sails" amid a rosy pent-up demand outlook.

On the back of robust demand - particularly from China, the world's biggest buyer of commodities - coupled with supply woes (as a result of mining disruptions and supply chain disruptions), a wide range of commodities have recouped their pandemic-related losses and even posted gains not seen in nearly a decade.

The upswing seems far from over despite a late-March sell-off in the commodities complex. Yet ironically, over-zealous expectations since late last year that commodities may be on the cusp of a supercycle or multi-year bull run seem to have become markedly watered down of late.