Commodity Super-Cycle Is Over: Citigroup

The commodity super-cycle is over, warns a new report from Citigroup's Global Commodities Strategy Group.

Commodity Super-Cycle Is Over: Citigroup
Julia Schmalz | Bloomberg | Getty Images

The message here is bold and clear—forget the era of easy money and long only investing. Welcome to a brave new world for commodity investors, "The New Abnormal."

Replete with references to global climate change and China's transforming economy, the analysts paint a picture of increasing supply, changing demand and plenty of opportunity for savvy investors. (Read More: Why the Days of Stock Picking May Be Coming to an End)

The report is so relevant that the analysts at RBC Capital Markets highlighted the Citi report in their own report Monday, under the subject, "In Other News."

On the supply side, the natural gas revolution in the United States is highlighted as an example of what is going on across the space—more money chasing new supply resulting in a surplus of various commodities.

But, increased supply is coming at a time when demand is slackening. According to the report China, always the "X" factor when talking about global economic demand is facing two structural changes including, "lower-paced growth and a far less commodity–intensive economy."

Increased supply and decreased demand should lead to falling prices in the near-term though Citi analysts do see demand starting to recover by the end of 2013.

As for global climate change, the analysts point out that seasonality has been "on the rise," due to changes in precipitation and temperature, most markedly in oil and agriculture.

That seasonality is "impacting fuel and food and through them inflation rates across the world"—no small issue for a hungry planet.

According to the report, there are roughly $240-$250 billion in commodity assets under management spread across the benchmark indices.

Follow me on twitter @LoriSpechler and read more of my posts on http://marketinsider.cnbc.com


  • Patti Domm

    Patti Domm is CNBC Executive Editor, News, responsible for news coverage of the markets and economy.

  • Bob Pisani

    A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

  • Sharon Epperson

    CNBC's Senior Personal Finance Correspondent

  • JeeYeon Park

    JeeYeon Park is a writer for CNBC.com. Follow her on Twitter: @JeeYeonParkCNBC

  • Rick Santelli

    Rick Santelli joined CNBC Business News as an on-air editor in 1999, reporting live from the floor of the Chicago Board of Trade.

  • Peter Schacknow

    Senior Producer at CNBC's Breaking News Desk.