(MENAFN) Saudi Arabia's commodities market has attracted a great deal of attention from hedge fund managers seeking a reliable source of non-correlated investment returns, but much of that interest has focused on traditional "hard" commodities such as oil and gold, while "soft" commodities have lagged, Arab News reported.
The Goldman Sachs Commodity Index rose 128 percent between Jan. 1, 2002 and March 31, 2005, comfortably outperforming global stocks and bonds, as growing demand for energy and a rush to the relative safety of gold forced prices higher. However, Goldman Sachs' agricultural sub-index rose a more modest 24 percent in the same period, thanks in part to huge subsidies within developed nations in Europe and the US which help keep food prices lower.
That, some argue, is all about to change, as there is growing evidence of a mismatch between long-term supply and long-term demand that must ultimately lead to a hike in food costs.
Population growth, increasing global wealth and the continued industrialization of emerging economies such as China and India are all putting demand pressure on agricultural prices and these are only likely to increase over time.
Global population, currently a little over 6 billion, is projected to rise to 9.1 billion by 2050, which is also likely to place pressure on demand.
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Financial News
