Posted on 01/18/2010 8:10:50 PM PST by Comrade Brother Abu Bubba
Legendary investor Jim Rogers remains bullish on commodities and says the world will soon face food shortages.
"The fundamentals (for agriculture) have gotten better," he says.
"The inventories are now at the lowest they've been in decades, not in years.”
And that trend is just intensifying, Rogers tells CNBC.
“ Things are getting worse. Many farmers can’t get loans to buy fertilizer now, even though we have big shortages developing "
And what will be the end result of this dynamic?
"Sometime in the next few years we're going to have very serious shortages of food everywhere in the world, and prices are going to go through the roof," Rogers said.
Agriculture is his favorite sector in the commodity space, but Rogers likes other commodities as well.
Take oil, for example.
“Over the next decade or so, oil is going to go much higher, because known reserves of oil are declining at a very rapid rate,” Rogers said.
He also favors gold for the long term, saying that if it drops $200 an ounce, he’ll buy more.
But if you’re looking for precious metals to acquire now, Rogers recommends silver or palladium, because they haven’t soared as high as gold.
Many experts share Rogers’ bullishness on commodities.
Goldman Sachs, for example, sees the S&P GSCI Enhanced Total Return Index appreciating 17.5 percent this year.
“Demand is growing on a global basis,” Peter Sorrentino, a money manager at Huntington Asset Advisors, told Bloomberg.
Every year my garden gets bigger and bigger.
When I drive around the area I’ve seen more and more Veg gardens every year.
Last year I changed the name of my ‘victory garden’ to the;
........JOHN GALT MEMMORIAL GARDEN...
I guess the same reason they call it Ovaltine instead of Roundtine....yes ripped from Seinfeld...
I don't know, I've not gotten past asteroid myself.. :)
‘“ Things are getting worse. Many farmers can’t get loans to buy fertilizer now, even though we have big shortages developing “’
First, fertilizer has been at all time highs for at least a couple yrs now. Its priced at levels well beyond what one might realize in crop prices. Chems and seed are the same way. These prices aren’t sustainable w/o (large) commodity price increases.
That said I know many guys in my area that just aren’t applying anywhere near the amt of fertilizer as in the past. Its not a matter of getting the loan its a matter of not wanting to carry the debt in an economy that all screwed up.
The large petroleum producers (processors like Exxon-Mobil, Shell, BP etc.) have not replaced their oil reserves for over 5 years (a declining, sinking asset). Exxon-Mobil is purchasing a natural gas producer (XTO), effectively abdicating their oil roots. Exxon-Mobil is betting that natural gas prices (which are separate and distinct from oil prices) are headed higher (looks like a intelligent business decision). Oil prices are headed even higher in the next 2-3 year time frame as compared to natural gas.
The companies do not have access to explore and produce, not only in the US, but around the world as well as they did when the companies were the "Seven Sisters". The petroleum industry is a worldwide industry. Yes, no doubt about it, the US Government has played a detrimental role in restricting offshore US exploration and production of oil.
Higher exploration costs are also involved. The "easy" oil is all gone i.e. the cost to replace that consumed Bbl of oil has definitely increased. I used to take at most 30 min. helicopter ride out to the rigs 20 years ago, now it's a 1 3/4 hr. ordeal out to the deeper more $expensive to produce from waters. The cost to transport one passenger is about $700/flight one way.
Brazil (Petrobas) is about the only company that has increased it's reserve base. There is no guarantee that the Brazilians will export that newly discovered oil so that you can stay in your cocoon of ignorance driving around in your Corvette in Alabama. The Brazilians have their own domestic consumption concerns. Don't count on that oil being exported to the US, the Chinese will be interested in it.
By the way, Investor Jimmy Rogers is from Alabama although he moved.
Oil is at $78 per barrel today. You claim that production is down, so oil will go up.
I’m pointing out that consumption is down, so oil will decrease in price.
Pick a timeframe. 1 month. 1 year. 1 decade. See who’s right.
In 2012 -2013, Oil will be selling for $200-300/Bbls.
Even T. Boone Pickens has stated that a free market does not exist in Crude Oil. That's your problem, you assume that a free market exists in crude oil. Replacement costs exceed consumption costs now.
It’s looking grim for your oil inflation prediction: http://www.calgaryherald.com/business/energy-resources/refinery+rate+drop+shows+crisis+downstream/2469373/story.html
Oil falling below $75: http://www.freerepublic.com/focus/f-news/2437368/posts
Sherlock,
Why don’t you try looking at the charts that you post with the rig utilization rate of 77% last year vs. 55.9% now???
JUST AS I STATED!!!!
This year is 2010. I am not concerned about how low oil goes in the short term. It’s the next move UP, UNDERSTAND?
In 2012 - 2013, Oil will be selling for $200-300/Bbls.
My goodness! Is oil already deflated down below $73 this week?! $5 drop in how many days?? This is going to be a fun 5+ years of posts to you!
Man, is oil really down to $71 already?! Fascinating...
$78/barrel today...
Down to $74.50 today...
We are headed to the largest corn crop in the entire history of the world.
AND a mountain of surplus corn.
We don't have a shortage of corn, we hve TOO MUCH.
...and can you imagine how miserable anyone would be if his diet consisted of yellow dent field corn?
Yeah, that would be miserable, which is why burning to to heat our homes and fuel our cars is on the table.
Ooops, oil production is increasing: http://www.freerepublic.com/focus/f-news/2627052/posts
Oil below $88, and now it's 2011. Tick. Tick. Tick goes the clock...
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