Whats Driving the Bull Market in Commodities?
Eighteen months ago, when the world was awash in asset bubbles, there was perhaps no market more overheated than commodities. Prices of everything from iron ore to palm oil to corn reached dizzying heights. Crude oil nearly quintupled in five years; rice tripled in only five months. World Bank President Robert Zoellick called rising food and oil prices a “man-made catastrophe” that had the potential to quickly erase years of progress in overcoming poverty. Protests and riots over high prices for necessities erupted across the developing world. Pundits dusted off Malthusian theories that the planet was physically unable to support the burgeoning appetites of an increasingly wealthy global population. What a difference a financial crisis makes. After the worldwide economic boom went bust, demand abruptly evaporated for many commodities that go into the production of houses, cars, computers, and all kinds of durable goods. The Dow Jones-AIG commodity price index has shed more than half it
