It may be tempting to view recent declines in commodity prices as the end of the resource “supercycle”—the period of sharp price rises and heightened volatility since the turn of the 21st century. Yet rumors of the supercycle’s death are greatly exaggerated. Despite recent falls, commodity prices are still near their levels of early to mid-2008, just before the global financial crisis hit. (To track the movements in commodity prices over time, see the interactive, “MGI’s Commodity Price Index—an interactive tool.”) At a time when the world economy remains below full power, this phenomenon is striking, and a sign that the supercycle is alive and well. … We believe that resource markets will be shaped in coming years by a race between emerging-market demand and the resulting need to increase supply from a more challenging geology and the twin forces of supply-side innovation and resource productivity. Innovations such as the use of 3-D and 4-D seismic technologies for energy exploration can improve access to resources. Productivity gains can reduce the wastage of food and water and make buildings more energy efficient. The question is whether technology and resource productivity can improve fast enough to counter the impact of emerging-market demand and a more challenging geology. … The race is on.
1. The changing resource landscape
2. Energy: The race between technology and geology
3. Metals: The looming supply challenge
4. Agriculture: Falling yield growth hits prices