Chalk up another QE2 success story!
Wool prices – yes, wool – has hopped on board the commodity bull, riding to record-high prices. The Wisconsin Ag Connection reports:
New record wool prices have been set this week, with unchanged supply and demand fundamentals continuing to support the market. Australian wool prices hit a 22-year record after the Eastern Market Indicator (EMI) rose 9 cents to 1384 cents/kilogram (kg) clean.
Australian wool growers are enjoying a spike in demand and price for their product as supply is low and demand is high from export buyers. The late autumn wool market is defying the trend of cautious international buying by jumping 54 percent over the past year, at a time when the Australian dollar surged 20 percent in value.
Source – Wisconsin Ag Connection: Record High Wool Prices Seen
We continue to see higher ag prices, nearly across the board. Fundamentals turned extremely favorable in the late 90’s, as low ag prices resulted in no new supply coming online. Since the commodity bull run started in 1998, we still haven’t seen much new supply come online (partly thanks to the 2008 crash).
Low supply, coupled with rising demand – and the Federal Reserve printing a lot of money – has agriculture red hot!
Recommended further reading: Our interview with Jim Rogers (including his thoughts on agriculture)