Factors in the Formation of Super-Cycles in World Commodity Markets

Abstract

Over the past few years, the world’s leading commodity markets have seen an upward trend in prices, which may indicate the beginning of a new super-cycle or may be of a short-term nature, driven by current changes in demand and supply. Commodity super-cycles are important for the global economy, especially for macroeconomic policies in commodity-exporting countries, and are also reflected in the dynamics of international financial markets. The purpose of the article is to determine the essence and features of super-cycles in world commodity markets as well as to identify the factors that led to the increase in commodity prices in 2020-2022. To solve the objectives set in the article, a number of general scientific and special methods of scientific cognition are used, namely the method of theoretical generalization, historical and logical methods, descriptive-analytical method, analysis and synthesis, induction and deduction, abstractlogical method and method of economic-statistical analysis. The article outlines the mechanism of deployment of the conjunctural cycle in commodity markets and its connection with long cycles of business activity, which are conditioned by the implementation of revolutionary technological innovations. It discusses the dynamics of the main composite commodity indices. The factors influencing the growth of prices for commodity assets at the micro and macro levels are identified. The article traces changes in the course of commodity super-cycles during the 20th and early 21st centuries and investigates their causes. It is revealed that global inflationary processes, the dynamics of the US dollar index as well as the disruption of supply chains in international trade due to the COVID-19 pandemic had a significant impact on the global growth of commodity prices in 2020-2022. At the same time, forecasts about the recession of the global economy caused by the large-scale military aggression of russia in Ukraine and the long-term consequences of the pandemic as well as macroeconomic policies of large economies aimed at overcoming excessive inflation may somewhat cool the prices of commodity assets. To assess the sentiments and expectations of economic entities, the dynamics of the basis for WTI oil is analyzed, which gives grounds to conclude that the price fluctuations in global commodity markets in 2020-2022 are short-term in nature as well as to question the beginning of a new super-cycle. Identification and forecasts of conjunctural fluctuations in global commodity markets are important without any exaggeration for all economic entities – both for producers in making strategic as well as tactical management decisions on the development of production and in the formation of structural and macroeconomic policies of the country in order to increase the export potential of the national economy and to ensure its competitiveness.