Jim Rogers Sees `Skyrocketing' Prices for Commodities

Jim Rogers Sees `Skyrocketing' Prices for Commodities (Update3)
By Betty Liu and Eric Martin
Sept. 24 (Bloomberg) -- The Federal Reserve's interest rate cut was a mistake that will prompt ``skyrocketing'' agricultural prices worldwide, exacerbate a decline in the dollar and quicken inflation, investor Jim Rogers said.
The ``clowns in Washington'' have ``signaled to the world they don't care about the U.S. dollar,'' Rogers said in an interview from Singapore. The Fed reduced its benchmark rate by half a percentage point to 4.75 percent last week.
The commodities rally, which Rogers correctly predicted in 1999, may last 15 more years, he said. Oil may reach $150 a barrel during that time, Rogers added. In 2005, he said the commodity bull market may last until 2022 because of a lack of investment during the past two decades.
Rogers, 64, co-founded the Quantum hedge fund with George Soros in the 1970s and traveled the world by motorcycle and car in the 1990s researching investment ideas for his books, which include ``Adventure Capitalist'' and ``Hot Commodities.''
The dollar today fell to a record against the euro and weakened versus the yen on speculation U.S. growth is losing momentum, adding to pressure on the Fed to reduce interest rates again. The currency's slide has boosted gold as investors seek an alternative investment, lifting prices to the highest since 1980.
Crude oil has surged 32 percent in the past year, and last week reached a record $83.90 a barrel in New York. Wheat set an all-time high of $9.1125 a bushel on Sept. 12 as world consumption is forecast to exceed production for the seventh time in eight years.
`Place to Be'
On July 2, Rogers said agricultural commodities were ``the place to be,'' and that investors should buy them over stocks and bonds. Today, he advised against buying wheat, which has become the most expensive ever relative to corn, soybeans and cotton.
``I wouldn't buy it now,'' Rogers said. ``If you're going to buy something, buy coffee or cotton or sugar. Wheat has been going straight up for about a year. I don't like to jump on a moving bus.''
Prices will fall 30 percent to $6 a bushel within a year, said James Gutman at Goldman Sachs Group Inc. in London and Pierre Martin, manager of a $490 million commodity fund at DWS Investment GmbH. Chicago futures markets show a similar drop.
The Standard & Poor's 500 Index today lost 8.02, or 0.5 percent, to 1,517.73 after the International Monetary Fund warned of ``protracted'' economic instability.

To contact the reporters on this story: Betty Liu in New York at bliu17@bloomberg.net ; Eric Martin in New York at emartin21@bloomberg.net .
Last Updated: September 24, 2007 16:19 EDT

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