By Kevin Kerr, MarketWatch Last update: 12:01 a.m. EDT May 1, 2008
“As oil flirts with $120 a barrel and corn shoots up over $6 a bushel, it's clear that demand is real for both commodities, and yet there's also a bit of froth in those prices as well. How much of it is speculation?
Many claim it is caused by a weak dollar and speculation -- that is naïve. While the U.S. Federal Reserve policy of "print until the ink runs out" is certainly playing a big role in these price increases, it's not the only culprit.”
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“Take for instance the rationing of rice sales by Costco Wholesale Corp. Is this the speculators buying up stocks of rice? Hardly. I shop at Costco but have never bought a bag of rice, and now I probably couldn't. Small restaurants are buying up all they can find because prices are simply out of control. It's real demand by real people.”
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“The new reality for food costs is here, and for investors the opportunities are plentiful not only in the future markets, but in the equities that serve agriculture as well.”
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