The Commodity Super Cycle: Is This Time Different?

Some analysts believe that the commodity price boom of the new millennium has played itself out. However, natural resource–based commodity prices (with the exception of shale gas and its downward pressure on U.S. natural gas prices) have remained high by historical records over the last few years, despite the feeble global economic recovery (Canuto 2014). The commodity price spike that started at the end of the 1990s has not been significantly affected by the global downturn, with average prices similar to 2008 levels (figure 1). Indeed, commodity prices have occasionally shown signs of reviving more quickly than the global economic output level (figure 2). So the question is: Have we entered a phase of descending commodity prices? This note argues that it may be too soon to say that the commodity super-cycle phenomenon is a thing of the past.