Jim Rogers on Sugar
Six Ways to Profit
by Bob Blandeburgo
Recently by Jim Rogers: Dow 1 Million? Sure, Why Not?
Global investing icon Jim Rogers is shifting his sights from gold to sugar.
And with good reason.
Sugar prices have zoomed more than 80% since the start of the year — eclipsing the 21-cent-per-pound mark for the first time in 28 years. But Rogers says there's more room to run: Even after its scorching advance this year, sugar remains 70% below the record peak it hit in 1974.
Given that kind of profit potential, Rogers is much more bullish on sugar than he is on gold.
Sugar is still very depressed on any kind of historic basis and I suspect it will go higher, he said recently. I wouldn't sell sugar. I don't know if it is going to go up in the next week or the next month, but I am certainly expecting sugar to go much higher during the course of the bull market over the next several years.
Not that he's bearish on gold. It's just that his ardor for the yellow metal has clearly cooled: "If it goes down I'll buy some more, and if it goes up I'll buy some more, he said. I periodically buy some gold. I don't have a method to it. I just buy it."
Rogers first made a name for himself with The Quantum Fund — a hedge fund that's often described as the first real global investment fund — which he and then-partner George Soros founded in 1970. Over the next decade, Quantum gained 4,200%, while the Standard & Poor's 500 Index climbed about 50%.
It was after Rogers retired in 1980 that the investing masses got to see him in action. Rogers traveled the world (several times), and penned such bestsellers as Investment Biker and the more-recently-released Bull in China.
He's also made some historic market calls. Rogers predicted China's meteoric growth a good decade before it became apparent. And in early January 2008, he warned that the U.S. economy was headed for one of the worst recessions in decades, and counseled investors to shift into commodities since they were primed for a big upswing — two predictions that would have richly rewarded investors who took them to heart. He reiterated those predictions — as well as several others — as part of two exclusive interviews that he granted to Money Morning Investment Director Keith Fitz-Gerald that April.
Rogers — the chairman of Rogers Holdings, and a man who shifted his home from New York to Singapore because of the global trends he follows — has now turned his attention to sugar. And he's not alone.
Commerzbank AG (OTC: CRZBY) analyst Eugen Weinberg told Commodity Online that net long positions on sugar contracts traded on the ICE Futures exchange (NYSE: ICE) (formerly the New York Board of Trade) are running at four to five times their normal levels, totaling more than 200,000 metric tons. His take: Cash-rich hedge funds have developed a sweet tooth for the crystalline commodity.
This situation hasn't been observed in years, Weinberg said in an interview. I think we are seeing a combination of very important fundamental factors and the price being driven by speculative interest.
And Michael Coleman, a Singapore-based manager of commodities hedge funds, told Bloomberg TV that sugar prices could soar an additional 80% — and could even eclipse the 40-cent-a-pound level.
After peaking at a recent high of 23.33 cents earlier this month, sugar closed yesterday at 21.79 cents a pound.
August 27, 2009
Jim Rogers has taught finance at Columbia University's business school and is a media commentator worldwide. He is the author of Adventure Capitalist, Investment Biker, Hot Commodities, A Gift to My Children, and A Bull in China. See his website.
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