Pulse Beat Individual Articles

Clancey’s Stats: Are the global base industrial commodity markets entering a supercycle?

Brian Clancey, Senior Market Analyst and Publisher, STAT Communications – Summer (June) 2021 Pulse Beat

There is some interesting speculation emerging that global base industrial commodity markets could enter what is termed a supercycle, where demand is greater than supply for several years.

The last two were in the 1970s because of OPEC’s (Organization of the Petroleum Exporting Countries) impact on global oil markets and the early 2000s because of steep increases in Chinese demand. The first lasted into the early 1980s and the second until 2014, helped by bullish crude oil markets in 2007 and 2008.

The question is whether agricultural markets get caught up in the excitement over commodities and whether this impacts pulses. There was undoubtedly a strong reaction in global agricultural markets after U.S. President Bush mandated that ethanol be incorporated into automotive fuel.


Ethanol’s share of the U.S. gasoline market is estimated to have jumped from 1% in 2000 to 10% by 2011. Those increases resulted in the food or fuel debate and may also have boosted public interest in sustainable crops and production methods.

Those mandates resulted in bullish market conditions for pulses in 2007 and 2008 largely because of competition for land use with grains and oilseeds.

Global price indices for grains, oilseeds and pulses set new record highs in both 2007 and 2008. Values dropped off in 2009 because of production responses.

Grains and oilseeds reached their highest levels in history in 2011 and remained strong through 2014. Surging crude oil markets were a factor because they increased transportation costs and prices farmers had to pay for fuel, fertilizer and other inputs.

Pulse markets were not weak during that period but failed to follow other field crops. Rising seeded area and production levels worldwide moderated prices for pulses even though consumption was rising and the world’s residual supplies of pulses were trending lower.

Except for pulses, the end of the supercycle in base commodities in 2014 was followed by lower values for all field crops.


Global pulse markets continued to advance through 2015 and 2016, helped by surging imports by India. That countries annual purchases jumped from 3.64 to 6.96 million metric tonnes (MT) between the 2013 and 2017 calendar years.

Dramatic changes in import policies and initial efforts to reach self-sufficiency in pulse production saw its imports collapse to around 2.5 million MT in 2018. They recovered to over 3.3 million in 2019 but reached only 2.88 million in 2020 despite efforts to drastically boost lentil imports.

India’s demand helped global pulse exports leap to 19.12 million MT in 2017. They sank to 17.61 the following year but rebounded to 19.15 million last year, with China’s demand for pulses for use as a livestock feed ingredient becoming a significant factor. Expansion of the fractionation sector helped increase domestic disappearance levels in several countries. Still, the quantity of whole pulses it consumes is less than one would think, given the dollar values being discussed.

Global pulse markets have languished since 2016 and 2017. So far, between 2018 and this year, the index has averaged 76.55 points, compared to 88.19 during the same four-year period a decade earlier.

However, it has been trending upward this season, setting a new season-high of 88.4 points during the week ending March 19. That has coincided with steady gains in old crop grain and oilseed values. Demand has also been relatively good despite the end of COVID-19 coronavirus stockpiling. This impact on movement was partly offset by steep reductions in opening season inventories of most pulses, which helped moderate the impact of larger crops.

Several new crop grain and oilseed markets are heavily discounted to spot, but markets are starting to wonder if signals from China are intentionally bearish. On the other hand, there are offsetting doubts. Some believe China’s harvest will be smaller than hoped, while others think new disease strains will halt the hog herd’s expansion, reducing overall feed demand.

Those are short- to medium-term considerations. Suppose those analysts who think the world is entering the start of another supercycle in global base industrial commodity markets are correct. In that case, that could have an impact on global agricultural markets.


Agricultural markets lagged the start of the last supercycle by a year or more. We did not see the full impact until after 2009. That is not surprising as it takes time for higher costs to work their way to farmers. It also takes time for any economic benefits to be felt in the amount and diversity of foods people eat. There may be some key differences between what might happen and what happened in the past. Historically, there has been a fairly strong correlation between crude oil prices and those for field crops. Investment in oil production and refining has declined in recent years, while investment in alternate energy has maintained a relatively good pace. More importantly, the cost of producing alternate energy has declined. Several research projects are under- way, which promise greatly improved storage capacity and efficiency for electric cars and other uses.

During the transition, there is good reason to believe oil prices will be affected. It is still a key ingredient in a wide range of industrial and consumer products. Apart from that, general strength in industrial commodities does impact cost across the field crop marketing chain. To the extent that makes farming less profitable, field crop markets will respond.


Sometimes prices for field crops are slow to respond to demand. More than once, market participants have lifted their heads from their book and declared, “Oh my gosh, there is not enough left!”

Prices reflect the sum of all the information held by all participants. No one individual or system has access to all the data. This can result in demand creep no matter how good the reporting systems for pending sales.

At the moment, inventories of pulses are thought to be more than ample in some destinations. If they see improved local demand, those importers may not react until it is absolutely certain they need to buy.

Such sentiments can run through all of agriculture. As a result, prices could appear to languish for an extended period of time. Upward trends may not be recognized until they become obvious.

The implication is that if 2021 or 2022 mark the start of a new supercycle in base commodities, it may not be reflected in agricultural markets until 2023 or 2024 because of the need for the economic benefits to become more widely distributed and global economic activity fully recovers from 2020.