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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: ldo79 who wrote (360822)3/4/2008 2:53:50 PM
From: stan_hughes   of 436258
 
Roubini may be underestimating the resilience of commodity price advances here, based upon a new dynamic on the global demand side caused by influences such as BRIC -- certainly Rogers and a few other people seem to think so -- I'm not trying to say it's different this time, just that the next down cycle timing may not be as typical of past contractions as Roubini expects

It's usually a given in the late cycle stage that commodities first run and then later collapse under the weight of a combination of additional supply being brought on-line ironically just as demand starts to falter -- but significant additional supplies of most commodities do not seem to be on the horizon yet -- whether you prefer to chalk that up to peak theory, geopolitics, lead times, environmentals or whatever, it's still true

So if it takes another couple of years before significant additional supplies of most basic commodities become available (if, as in the oil case, new supplies can be conjured up at all), it is quite conceivable that prices will remain high for some time, even if world demand diminishes. The impact of an economic slowdown on the supply-demand equilibrium will vary between commodities, but on the food complex side e.g., demand isn't likely to even decline at all
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