We know that commodities will often see super cycles which are different from the business cycle. A super-cycle in commodities can be related to weather, but more likely the big cycle will be associated with stronger than expected demand matched by supply constraints from under-investment. The under-investment is often the result of low commodity prices which caused investors to believe that the return on capital is not worth the effort to drill, dig, or plant. This is the story that Goldman Sachs is telling, and it seems reasonable.
The GS story is based on what they call the 5-D's, disinvestment, decarbonization, de-risking, data centers, and defense spending. The simple story is that demand is increasing from unexpected places and supply will not be able to meet this demand because capital has not been sufficiently deployed in commodities.
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