| The commodities cycle is all about supply and demand responding to prices. To put it very simply, as prices rise companies invest and supply increases. Prices then fall, which leads to production cuts, and eventually demand increases, pushing up the market and the cycle starts all over again.
That is, at least, the theory. In practice the price signal usually takes time to take effect, especially in a market downturn. Although there are signs of oil producers responding to price declines, in some other commodities, such as metals, coal and sugar, the reaction has not been immediate...............................................Full Article: Source
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