The market has become very optimistic about commodities and there is already talk of a new super cycle, a thesis that, although it has yet to develop, we subscribe to. 

There are several reasons to believe that the ongoing rally still has room for consolidation:

1. Synchronized global growth + high liquidity: with multiple vaccines about to be distributed, economic risks and concerns about another wave have diminished at the margin. Accelerated fiscal stimulus (commodity intensive). 
2. Weakness of the dollar (denomination effect)
3. China's growth will continue to be strong as well as demand. Given some delays in execution this year, several infrastructure projects will be carried forward to 2021. 
4. Lack of relevant supply additions: In several commodities, we see a lack of relevant supply additions in 2021. This would be very optimistic, especially as we are coming from years of a very low level of investments in the sector. 

Goldman Sachs, which in late 2020 predicted a new "structural bull market" for commodities, argues that stimulus packages, such as China's new five-year plan, Europe's Green Deal and President-elect Joe Biden's planned package for the United States, -could have an impact similar to that of China's infrastructure buildout in the 2000s. 

And recently, JP Morgan pointed out that commodities have started a super cycle that will last for years. The fight against climate change will have a positive impact as metals are required to build the necessary infrastructure in energy, batteries, EVs and there will be less supply of crude oil. China's growth, expansionary monetary policies, dollar weakness, inflation are other drivers. Commodities have had 4 super cycles in the last 100 years. The last one occurred in 2008 (peak) after 12 years of expansion.

 Relative performance Commodities vs Equity                                                          

  CRB Commodity index