By
CommodityHQ
:
By Jared Cummans
gold will drop 20%
better buy than gold
avoids commodities is a fool
Mr. Rogers recently
commented that
"all these guys are delaying or suspending or cancelling new supply
which is bullish. Until the supply comes we're not going to have an
end to the bull market and, certainly in agriculture, my goodness,
inventories are near historic lows, we have serious shortages of
everything in agriculture developing, including farmers". Rogers
has even said if he was not so lazy himself he would become a
farmer, as there is such a high demand for that workforce in
today's society.
His reasoning is sound, but there are even more factors that
help his argument. As the world's population continues to grow and
emerging markets build up wealth, demand for basic assets like food
is only going to grow. If we do not find a fix for the current
supply issues, how are we going to handle the growing demand from
countries like China and India? The answer is a rise in commodity
prices. Prices will inevitably go higher as the supply pinch
continues, and this rise will hold until more farmers and suppliers
are attracted to the scene.
Still, you have to wonder if Rogers is simply rambling and his
comments have only been made favorable given the massive drought
that plagued much of the Midwest. Prior to the hot streak and
destruction of crop yields, commodity indexes had been performing
pretty poorly over the past year and a half. The massive spike in
early July has of course, erased a fair amount of those losses, but
the questions you have to ask yourself is whether or not this is an
isolated event, or if it this momentum will be able to hold.
It certainly seems like a fair amount of damage has been done,
so prices (especially for agricultural commodities) likely won't
fall out, but it seems that they may have been overbought in the
recent rally. So what do you think, is this just Rogers pumping up
his own agenda, or does he have a valid point?
Disclosure:
No positions at time of writing
.
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