Water Week

EWN Publishing

Physical commodities such as coffee and sugar and cotton best place to be over the next five years as food prices spike under climate contraints

Posted by waterweek on 10 October 2007

According to Gabriella Hold in The Australian Financial Review, (10/10/2007, p. 31) Clime Asset Management managing director Roger Montgomery says real commodities should outperform not only over the next year but for the longer term as growing populations boost demand for foodstuffs. “Physical commodities such as coffee and sugar and cotton will be the best place to be, probably over the next five years,” he said.

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Nomura Australia equities strategist Eric Betts is similarly bullish on commodities, saying they could well outperform other asset classes, as the impact of Australia’s drought increases food prices.

Food prices to spike: The December wheat futures contract on the Chicago Board of Trade recently reached a record of $US9.6175 a bushel on supply concerns as imports of the grain are increasing and indications that Ukraine would limit exports. And while sugar prices have fallen back recently after strong gains, prices continue to closely track higher crude prices because of sugar’s use in ethanol fuel. Meanwhile, November crude oil futures recently jumped to a record $US83.32 a barrel after a sharp fall in US oil inventories.

The Australian Financial Review, 10/10/2007, p. 31

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