In a market like this one, it pays to note the subtle differences between ostensibly similar assets. For example, there are car stocks and then there are car stocks. (Yes, I am writing about cars again, but not for the whole column, honest!)
From its high of $147 a barrel last July, West Texas Intermediate Crude oil prices have crashed a cumulative 74%. That ranks as one of the worst absolute declines for any asset since the onset of deflation last July as investors dump most commodities, except gold, silver and several other soft commodities.
It was a schizophrenic day for gold and silver, which could do little right during regular trading but couldn’t be stopped in the after hours action.
This is the fifth installment of a new Money Morning series highlighting investment opportunities in the global bull market in commodities. Soaring prices of grains, dairy and meat have been grabbing global headlines. But other commodities have been on the rise as well.
It’s all doom and gloom in the British residential property market. By contrast, farmland values are rocketing at a record pace.
There is no commodities bubble, at least according to the majority of economists surveyed by The Wall Street Journal.
This from the WSJ:
Fifty-one percent of the respondents said demand from China and India was the prime factor in soaring energy prices, and 40% said demand was the chief contributor to rising food costs. Constrained supply was cited second most-often; 20% blamed supply problems for higher food prices and 15% for increasing energy prices.
“It’s a combination of demand and supply issues,” said Joseph Carson of AllianceBernstein.
“Soft commodities are now the best-performing sub-set of the commodity bull market,” says Eric Roseman in the Offshore A-Letter.
“The world’s supply is withering. The demand for these precious commodities is booming in emerging markets, while the world’s…
The food crisis — caused by sky-high rice prices and grain prices — has now hit Americans, prompting many visitors to this site to ask: Is there a rice ETF?
According to the Washington Times, “Costco and other grocery stores in California reported a run on rice, which has forced them to set limits on how many sacks of rice each customer can buy.”
Meanwhile, reports the paper, “Filipinos in Canada are scooping up all the rice they can find and shipping it to relatives in the Philippines, which is suffering a severe shortage that is leaving many people hungry.
Rice prices have hit fresh records after World Bank officials said Thailand, the largest exporter of the grain, may restrict exports, worsening the global food crisis.
The price of rice, which has doubled in the past year, jumped 2.3% in Chicago today.
“Soft commodities are now the best-performing sub-set of the commodity bull market,” says Eric Roseman in the Offshore A-Letter.
No other asset class comes close to commodities over the last six years. Not stocks, not bonds, not real estate and not even most emerging markets. In fact, even during the worst credit crisis in the United States in 60 years, commodity benchmarks continue to hit new all-time highs in 2008.
Right now, countries around the world are facing food shortages. There’s just not enough to go around, when prices of corn, soybeans, rice and other basic staples are soaring in price.
