How the commodities supercycle could affect the US economy and industrial remote control
According to economists and researchers at Wall Street’s top investment firms, as the global pandemic loosens its grip on the economy, markets are bracing for what it calls a “supercycle” in commodities. That could mean a high yield for investors, and manufacturers like Control Chief are bracing for an increased demand in industrial remote controls.
Some economists debate on whether the event will be a “supercycle” or a “boom”, but it’s clear that commodities like oil, grain, copper, steel, and aggregate are all bracing for increased demand as prices rise.
What is a supercycle?
A supercycle can be defined as “decades-long, above-trend movements in a wide range of base material prices” deriving from a structural change in demand.
“Super-cycles of commodity prices since the mid-nineteenth century”, United Nations DESA Working Paper, 2012
What’s driving the train?
Economists are giving us a hopeful picture of what commodities are “driving the train” in their analysis.
This video at AgWeb explains the commodities boom, especially as it relates to the agricultural markets.
We are in the beginnings of a commodity super cycle. Corn and soybean prices are going through the roof. We have incredible Chinese demand for corn right now. China is driving global markets for beef, pork, poultry, corn, and soybeans. We are going to have a year where all our major commodity markets are being driven by a country with very limited data. That will drive some uncertainty into the markets. But with this weakening dollar and the COVID recovery, we are going to see a boost broadly to the global commodity markets.
– Brett Stuart, CEO, Global AgriTrends
“We do believe that the demand is a little stronger than what USDA has penciled in their balance sheet. Probably more so on the feed grain side, but certainly in oil seeds. Also, when you look at inspections, and weekly export sales, you know, we’re already at 98% – when you combine the two together – 98% of the USDA commitment on bean exports, and its 89.3% on inspections and sales on corn. We still have half of marketing here yet to go. So, I do feel that USDA is probably a little light on their numbers.”
-Mark Schweitzer, vice president of global economic research for ADM
The passing of an infrastructure bill has been long debated in the halls of Congress, but also delayed as weightier concerns have taken the forefront. US infrastructure spending has run 1.25 trillion dollars under trend for the past decade, and experts at Morgan Stanley say that the US Infrastructure needs 3 trillion dollars in repairs.
“We decompose the $3 trillion into $398 billion for concrete bridges, $796 billion on concrete roads, steel bridges at $300 billion, and $1.6 trillion to take asphalt roads from poor to good condition. Without changing assumptions on housing or commercial construction, we show that the uplift from infrastructure would be enough to produce another super cycle,”
– 5 stocks to buy for the 1950s-style infrastructure supercycle: Morgan Stanley
Industrial Remote Control Helps Keep Up With Demand
“The other core plank of Goldman’s supercycle thesis is the lack of supply ready to meet any structural shift in demand.
Capital expenditure in the commodity complex was already low before COVID-19. It has plummeted further in recent months as producers prioritised maintaining existing operations.”
Goldman proclaims the dawn of a new commodity supercycle -Reuters
Because of a decrease in production throughout the pandemic, the supply of many of these commodities is low, which means the value has gone up. As the economy fires back up, and as the value has increased, the demand for these products increases. That means producers, manufacturers and distributors will be working at maximum capacity to meet the increased demand.
That’s where Control Chief comes in. We make industrial remote controls for any manufacturing application. We serve the steel, grain, coal, oil, mining, aggregate, and other commodities producers with our industrial remote controls, allowing crane operators, locomotive operators, and other equipment operators to safely and efficiently operate their equipment wirelessly.
We’re ready to serve our customers as they ramp up for an economic boom!