Retuers’ Pratima Desai wrote:
Some analysts say commodities this year have experienced a bubble, which will quickly deflate when short-term investors pull out, but along with large institutions such as pension funds, Rogers is in the market for the long term.
“Yes, there is always new money. That always happens in bull markets, because that’s where the opportunities are,” he said in an interview.”
The creator of the Rogers International Commodities Index cited the example of crude oil, which is trading above $100 a barrel.
People have been telling me for five years that oil prices are going down. Every time I ask them where the supply is coming from. So far, nobody has been able to tell me. Please tell me where the new oil is because I want to invest in it.
While many commodity analysts focus on demand, the chairman of Beeland Interests pointed out the significance of supply problems and historically low inventories.
Rogers told Reuters:
Shortages are developing because production is declining… Oil fields are in decline, copper mines are in decline. Whether it’s oil, wheat or sugar, the world does not have new production capacity.
Desai talked about some of Rogers’ investment plays. George Soros’ former partner in the legendary Quantum Fund “only invests in exchange traded securities, with the one exception being gold coins… Agricultural investments include listed stocks with farmland holdings and underlying futures such as wheat contracts.”
“There are enormous opportunities in farmland if you are a good farmer. Even if you are a mediocre farmer you can make a lot of money. Farming is going to be one of the best places to make money in the next 10 years, if you know what you are doing.”
According to Desai, the author of Hot Commodities: How Anyone Can Invest Profitably in the World’s Best Market “is not a farmer and has instead invested in the sector through listed companies with holdings in places like Australia and Brazil.” Rogers noted that because of the high price of oil, people are going to use more sugar for ethanol. In addition, the elevated oil price will mean strong demand for commodities like cotton. Rogers said, “Synthetic fibres come from oil, people will try to use more natural fibres.”