Insight Conversation: Jim Rogers, Beeland Interests Inc.

Jim Rogers, global investor, chairman of Beeland Interests Inc. and author who co-founded the Quantum Fund with George Soros, spoke to S&P Global Platts editors Andy Critchlow and Sambit Mohanty to share his insights on the possibility of oil revisiting $100 a barrel, the investment opportunities that the agriculture sector offers, and the impact of energy transition on the metals sector.

Commodities and energy markets have witnessed a broad-based rally in recent months and prices of some commodities have moved to pre-pandemic levels. What's the outlook for the markets from now until the end of the year?

All over the world, central banks and governments have printed and borrowed staggering amounts of money. It has never happened in the world history in such a short period of time.

When you have a lot of money and want to build a factory, it takes a long time. But if you go online you can buy cotton futures in 10 seconds. A lot of money is floating around now. And the easiest and fastest way to invest in is financial markets. And history also shows that when you have a lot of money it often leads to higher prices. That is what that has been happening. Right now there are a lot of new investors. At the moment it's all central bank money whether you like it or not. And I don't like it.

We had a little bit of pull back in crude prices after the OPEC+ deal to raise output. It's only a few weeks ago we had analysts telling us that about the possibility of oil going to $100 a barrel. Where do you see crude closing by the end of the year?

With all this money floating around, who knows, anything can happen. It has happened in the past and it will happen in the future. I do know that known reserves of oil are running out. Unless fracking becomes a huge, reliable and continuous source of energy, oil can go much, much higher. Yes, certainly we will have electric cars but that takes time. I would suspect that the price of oil would be higher by the end of this year than where it is now. And people will see higher prices in 2022 than what we have seen so far this year. We know about OPEC's decision to increase production, or they say they will. All the bad news is out here. And usually that means much of the news is out and it's time for prices to go higher again.

There is a lot of talk now about energy transition and the future of oil. Where do you think oil would be in 10 years from now given the world is pushing towards embracing cleaner fuels? Do you think oil will get its share of investments?

I expect oil prices to continue to go higher, not every day because nothing goes straight up. Yes, we will have electric cars and alternative energy. All of that will happen but that does not mean that oil cannot go higher for a few years. Thirty years from now I am not sure. Unless there is a gigantic discovery that I don't know about, it makes me skeptical. How can oil reserves be high and rise without new discoveries? Many of the traditional oil majors are putting their money into alternative energy sources. I am not saying they are wrong. I am just saying that companies only have so much money to invest. So if some money is going into solar, then less is going into drilling. So oil prices are not going to be in the bear market for another 10 years or so.

We see countries speeding up plans to embrace hydrogen. What hurdles the market could face and how far away we are from seeing hydrogen trade flows developing?

Everything I read about hydrogen says it's wonderful, it's great and it is happening. But you need to have the infrastructure for it. You need to have enough people driving it and you need to have the right prices. Henry Ford's wife had an electric car and she loved it. She did not like Henry Ford's cars with petrol engines. She was 100 years early. And now, electric cars are coming. If she was around, she would be very happy now.

Staying on the same energy transition and electric cars theme, what are your views on commodities such as battery metals, copper and lithium?

I certainly know that the price of copper is at an all-time high. Electric cars will use copper several times more than a regular car. People can see what's coming. Oil is not at an all-time high but copper is. What everybody knows that it is politically correct to have non-carbon sources of energy. And for a while it's going to make metals like nickel, lithium and copper very, very popular. And supplies of nickel and copper are not expanding as rapidly as they would have to in order to keep prices down.

What's the outlook for carbon markets?

Everybody favors them, at least verbally. They look promising in the foreseeable future.

Where do you think the opportunities will be in the future? What we should be looking at?

Agriculture offers a big opportunity. The average age of farmers in America is 58, and in Japan it is 66. The highest rate of suicide in UK is in agriculture. More people in America are studying public relations than studying agriculture. It's been a disaster. There are very few places in the world where there is money and expertise going into agriculture.

Unless something changes very quickly, agriculture is a very promising place to be in. Agriculture land prices in some places are going through the roof because there is nobody to sell them. Maybe they will give it to their kids. The price of sugar is down 70% from its all-time high. All agriculture products are down a lot and that's where the opportunities are going to be because somebody has to produce the stuff.

For the last decade, China has been the driving force for commodity markets. Will that demand center shift to another other country or region over the next decade?

I don't see any reason why China would not continue to grow. Nobody does straight up. They will also have their problems. I don't think China will stop itself from having electric cars and that means growth will continue. Agriculture offers an opportunity in China. Beijing says people in the cities have done well but people in the countryside have not. Beijing is now trying to give incentives for the countryside.

What will be the winners and losers in the financial markets in coming years?

I don't think the US dollar will lose its status this year but you can look down the road and for whatever reasons—political or economic—something is going to change in the foreseeable future. I own a lot of US dollars at the moment for a variety of reasons. But I know that somewhere down the road I will have to sell them and do something else. Whether I will buy bitcoin, I doubt it very seriously. Bonds are in a bubble, property in many places are in a bubble, and we can see some bubbles developing in the stock market. The only place that I see is still cheap are commodities—silver is down 50 % from an all-time high, sugar is down 70%, oil is down 50%. These are not bubbles. Commodities are the cheapest asset classes now. I would prefer to invest in agriculture.