Citi expects iron ore prices to fall into the $US30s in the second half of 2015, with the prices of other commodities – coal, oil and grain – also expected to weaken.

Citi's third quarter outlook, titled Sorting through the asset market bargain bin, stated that "rebounding Australian exports, lower Chinese steel production, mine re-starts and ramp up of new supply are expected to push iron ore prices below $US40 per tonne."

Iron ore was most recently trading at $US50.30 per tonne after falling to $US44.59 earlier in the month.

"The iron ore market continues to suffer from the three Ds: weak Chinese steel demand, cost deflation, and deleveraging among traders and steel mills."

Rebounding supply and falling iron ore supply costs were further headwinds on the supply side, said Citi.

"Mining costs declined sharply and could fall further; oil price's fall a major factor in declining extraction cost and freight costs.

"Low cost capacity extensions from Rio Tinto and BHP in addition to late stage projects from Vale and Roy Hill are more than sufficient to keep the market well supplied."

But putting iron ore aside, Citi said they expected a "stronger metals market" emerging by the end of the year.

Citi were bullish on copper, nickel, palladium and coffee and neutral on aluminium, lead, platinum, metallurgical coal, corn and ethanol.

But they were also bearish on crude oil, gas, gold, silver, thermal coal, coca, cotton, soybeans and wheat.

Metallurgical and thermal coal are Australia's second and third biggest mineral exports respectively.

Oil, currently trading at $US56.80, would stay around that level for the rest of the year, reaching $US58 at the end of the third quarter and $US57 at the end of the fourth, said the report.

Referring to Tuesday's nuclear deal with Iran, where oil sanctions would be lifted in return for limits on Iran's nuclear program, Citi's Seth Kleinman stated that "it looks like there is a distinct possibility that we'll be getting more crude out of Iran in the second half of the year."

The overall weak global economy was keeping commodity prices depressed, said the report.

"In a weak economic environment, commodity consumption should be challenged globally, offsetting any demand boost from lower prices."

Weak emerging economies, which were especially commodity-intensive, were especially harmful to demand, it said.

"With emerging market growth facing strong headwinds, and Citi's – along with the International Monetary Fund and most other official agencies – revised lower expectations for the rest of the year, it's hard to find a strong rationale for higher commodity demand growth."

The report noted that "fickle financial flows" from events such as the Grexit and expectations about US Federal Reserve interest rate policy would have "often unexplained unexpected and sudden consequences across commodities."