Mon, Apr 24, 2006 page12

• Jim Rogers touts agriculture futures

  NEXT BIG THING The star investor, who developed his own commodities index fund, said that commodities such as wheat, corn and soybeans were at historic low prices

  • STAFF WRITER WITH CNA
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  Jim Rogers, a former George Soros partner who foresaw the last commodity rally in 1999, said agricultural commodities may offer new investment opportunities on the back of huge demand, primarily from the Chinese market.

  Rogers, a co-founder of the Quantum Fund, one of the world's most successful hedge funds, made the forecast after delivering a speech to local fund managers and stock investors in Taipei on Saturday.

  Rogers also developed The Rogers International Commodities Index, which was designed to provide a means for investing in a broad range of commodities. Thirty-five commodities are represented in the Rogers Commodity Index.

  The New York-based investor is currently on a trip to Asia to help UBS AG, Europe's largest bank by assets, market commodities in this region.

  He said commodities markets would be a safe shelter for investors to hedge against the collapse of equities markets.

  Compared to soaring prices for precious metals such as gold and copper, agricultural futures, which are cheap on a historical basis, will be the next bonanza, driven by strong demand from Asia, Rogers, 63, said on Saturday.

  Wheat, corn, soybeans, coffee beans other commodities are good targets as their prices are relatively low compared to gold, he said.

  Cotton prices were more than 50 percent below their historical highs, soybeans were 60 percent below their peak and sugar 80 percent, he added.

  Prices of crude oil, gold, copper and zinc, however, have rocketed to record highs recently.

  "The price [of agricultural futures] will only move up as supply and demand is out of balance now," he said, adding that investors should not overreact to the short-term ups-and-downs of those futures.

  Rogers said the bull market for commodities would endure for the next ten years driven by China's voracious appetite.

  China's rapid economic growth has made that nation the world's biggest consumer of farm produce, steel, copper and zinc and the second-largest user of energy.

  To invest in agricultural products, Rogers advised investors that commodities futures were the optimal tool.

  Investors can also buy raw material stocks, or farm produce funds, but the returns will be only one third of those from commodities futures, he added.

  Rogers is known to be bullish on the vast Chinese market. He once famously predicted that China would emerge as the world's largest economy in 20 years. He hires a babysitter of Chinese descent to care for his 3-year old daughter to allow for her to grow up in an English-Chinese bilingual environment.

  For those interested in investing in China, Rogers said that farm produce, industrial raw materials and tourism-related industries would be the best bets.

  Noting that free movement has been banned for Chinese people for nearly a century, Rogers said the travel service sector has amazing growth potential if the government lifts the ban.

  Meanwhile, Rogers gave a pessimistic forecast on the US dollar. The astronomical US trade deficit has dimmed the greenback's value, he said, adding that at least 10 to 12 other foreign currencies, such as the Chinese yuan, the Singaporean dollar and the Canadian dollar, are more valuable than the greenback.
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