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'The tide is turning' on inflation, kicking off the 5th commodity supercycle, says JPMorgan

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(Kitco News) Signs of inflation are already here, and so is the new commodity supercycle, JPMorgan said in a note.

"We believe that the new commodity upswing, and in particular oil upcycle, has started," the JPMorgan analysts said. "The tide on yields and inflation is turning."

The new supercycle will be driven by the post-pandemic recovery, inflation, accommodative monetary and fiscal policies, a deteriorating U.S. dollar, and a global fight against climate change, the note said.

Metal prices are already rising to multi-year highs, agricultural prices are surging, and oil is now trading above $50 a barrel, said JPMorgan, adding that these are all signs of a commodity supercycle that can last for years.

The coming economic recovery will strongly support the surge across the commodities sector. This will be mixed in with a lot of inflation hedging on Wall Street, JPMorgan said on Wednesday.

Metals that are used in renewable technologies will benefit immensely as an "unintended consequence" in the fight against climate change. According to the note, the move towards green technologies is likely to limit oil supply while raising the cost of certain metals that are used in renewable batteries, EVs, and other green infrastructure.

JPMorgan is not alone in this call. Other significant market players Goldman Sachs and Bank of America also forecast a surge in commodities as the global economic recovery gets underway this year.

During the last century, commodities went through four supercycles, with the last one running out of steam in 2008 after 12 years of gains, the report explained.

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