Line chart showing the current commodity bull super-cycle, starting in 2020, with two previous bull super-cycles (1999 to 2008 and 1971 to 1980). The current commodity cycle that began in 2020 is following a similar trajectory of the 1999-2008 bull super-cycle and 1971-1980 bull super-cycle.
Sources: Bloomberg and Wells Fargo Investment Institute. Daily data. 2020–current bull super-cycle uses Bloomberg Commodity Index from March 18, 2020 to December 31, 2023. 1999–2008 bull super-cycle uses Bloomberg Commodity Index from July 13, 1999 to July 2, 2008. 1971–1980 bull super-cycle uses Reuters Continuous Commodity Index from October 4, 1971 to November 20, 1980. The Reuters Continuous Commodity Index is an equal-weighted geometric average of commodity price levels relative to the base year average price. The Bloomberg Commodity Index is calculated on an excess return basis and reflects commodity futures price movements. The index rebalances annually, weighted two-thirds by trading volume and one-third by world production, and weight-caps are applied at the commodity, sector, and group level for diversification. An index is unmanaged and not available for direct investment. Past performance is no guarantee of future results. Investing in commodities is not suitable for all investors. The commodities markets are considered speculative, carry substantial risks, and have experienced periods of extreme volatility.
Super-cycle = If you look at commodity prices over the very long term (hundreds of years), it becomes evident that they tend to move in overall bull and bear cycles, some lasting decades. These are super-cycles.
Key Takeaways
- Despite the pullback in 2023, commodity prices have been on an incredible run since 2020’s lows. We believe a new bull super-cycle began in March 2020, and history suggests that there could be even more gains to come.
- Keep in mind that past bull super-cycles have not been straight up. We expect to see dips, lulls, and pauses in commodity prices during the bull.