Over the long term, the infrastructure construction in China is likely to sustain high prices for hard commodities, while rising demand by emerging middle classes in Asia suggests increased demand for protein and soft commodities. Moreover, as the global economy settles into a new post-crisis order, many long held structural supply chain relationships are changing, often exacerbated by weather-related shocks.
In the last year we have seen the effects of Ukrainian drought, Russian log taxes, US oil spillages, Chilean earthquakes, and Brazilian and Queensland floods on primary production and prices. La Nina weather conditions could suggest more volatility ahead. New Zealand farmers are still recovering from the last commodity boom when some overcommitted, and are still looking to reduce the debt they built up.