INTERNATIONAL. Legendary global investor and chairman of Singapore-based Rogers Holdings, Jim Rogers believes that shortages in the agriculture sector are coming.
Wheat prices in Europe hit their highest level in two years, rising almost 50% since late June as Russia due is experiencing a record drought that has destroyed millions of hectares of its land.
"That's the straw that broke the camel's back," Rogers told CNBC in a phone interview Tuesday.
"We're going to have much, much higher prices over the next few years," Rogers added.
Russia, currently the world's number three wheat exporter, earlier this week slashed its grain harvest forecast to 70-75 million tonnes owing to the worst drought for decades.
Prime Minister Putin this week banned grain exports for the next four-and-a-half months due to the drought.
Last year, Russia exported 21.4 million tonnes of grain and observers had already warned that could be sharply lower this year owing to the drought. The Russian Grain Union has said that in a worst-case scenario, they could range from as low as 11 million tonnes up to 19.5 million tonnes.
Concerns about Russia -- coupled with a drought that has also hit Ukraine and Kazakhstan as well as a low harvest in Canada -- had already led to a spike in global wheat prices to two-year highs.
On Euronext, the November milling wheat future jumped after Russia's announcement to 234 euros per metric tonne, up 11.96% on the day.
US wheat futures on the Chicago Board of Trade fell 5% on Friday after surging more than 20% earlier this week and nearly doubling since early July to US$8.41 a bushel.
Investors finally began to realize that prices for agricultural commodities have been too low for too long because of subsidies and other factors, which made agriculture an unattractive area for workers, Rogers explained.
"Be prepared, if you have a sugar bowl home go fill it up because it's going to be more expensive," he said.
"Anybody who's got potentially good agriculture land and good weather" is likely to emerge a winner out of this situation because prices of nearly all agricultural commodities are set for steep rises, Rogers said.
"Prices aren't high enough and most people don't believe it," he said. "Unless prices are high you're not going to attract people in the business. Eventually people will go into farming again but it's going to take a while."
Rogers has been warning about shortages coming in the agriculture sector for a while.
The legendary investor believes that most agricultural products are depressed on a historic basis and the story is not over for a few years because no one is bringing new supply on stream.
"A catastrophe is looming," he said in October, adding 'the world is going to have a period when we cannot get food at any price in some parts of the world.”
“If we start having problems, weather problems, production problems, the price of rice is going to skyrocket over the next decade,” Rogers said. "When it happens I don’t know. But I know that the fundamentals are ripe," he added.
“I’ve owned commodities since 1998,” he said.
“I still own them all. Some day, I presume, there’s going to be a wild hysteria at the end of the bull market. Hopefully, I’m smart enough to sell if and when that happens.”
"It's all happening at a time when governments are printing more money… it's a very dangerous situation," Rogers told CNBC on Tuesday.
"When you print money, it's got to go in a place where it can protect itself, and that's real assets," he added.
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