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By Jared Cummans

It seems like every day brings bolder statements from Jim Rogers, one of the most respected commodity investors of all time. Rogers has gone on the record recently with calls like gold will drop 20%, silver is a better buy than gold, and anyone who avoids commodities is a fool. But his new comments bring a wave of optimism to the world of commodity investing, especially for agricultural investments, as Rogers feels commodity prices will have to spike given the dismal outlook for the overall industry.

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.

Source: Jim Rogers: Commodity Bull Market Has No End In Sight