Jim Rogers, CEO & Chairman of Rogers Holdings told CNBC on Wednesday that the recent decline in commodity prices have little to do with fundamentals, or concerns about the strength of the global recovery, and everything to do with the collapse of brokerage firm MF Global (MF).
According to Rogers, the sell-off is “artificial.”
CNBC: “With MF Global going bankrupt [MF Global declared bankruptcy nearly 4 weeks ago] – which was a gigantic commodities firm – there was a lot of artificial forced liquidation of commodities. People have to sell whether they like it or not. It’s artificial selling right now,” Rogers said.
Agricultural commodities have been the hardest hit from the collapse of MF Global – with rice futures currently printing the tape at 4 1/2 month lows ; falling more than 14% and wheat futures down 9% in the period.
Rogers says the recent weakness in commodity prices isn’t surprising. CNBC: “This happened before in 2008, when Lehman and AIG went bankrupt, they were both huge in commodities and everybody had to sell,” he said.
Despite the recent weakness in commodities Rogers remains bullish on the sector. According to the legendary investor, the long-term prospects for commodity prices are still robust due to world demand for food, energy and manufacturing materials. Rogers also says that while commodity trading is expected to remain volatile due to the uncertainty of the pace of recovery from the global recession, investors will benefit whether the global economy improves or not.
CNBC: “I’m long commodities and currencies, because if the world gets better, the shortages in commodities will make sure I make money; if the world economy doesn’t get better, I’d rather own commodities because they’re going to print money,” Rogers said, referring to the Fed’s easy monetary policy.
“Throughout history, when things have gone wrong, they print money…when they print money, you should own silver, you should own rice, you should own real assets.”
Rogers told CNBC he is using the recent decline in commodity prices to accumulate agricultural commodities, and is waiting to add positions in gold.