Commodity Oddity

Commodities are skyrocketing again, prices for raw materials and basic foodstuffs are higher now than they were at the height of the housing bubble.

Commodities have risen for five consecutive months, the longest winning streak since 2004, bolstered by an improving economic outlook. Raw materials also advanced as drought in Russia, flooding in Canada and a cyclone in Australia ruined crops and as protests across the Middle East spurred concern about supply disruptions.

“What is new is that the fundamentals are getting tighter and the political risk premiums are increasing for energy and agriculture,” said Jean-Marc Bonnefous, a co-founder of London- based Tellurian Capital Management LLP, which invests in energy, metals and agriculture.

Copper for delivery in three months rose as much as 0.6 percent to $10,000 a metric ton on the London Metal Exchange today, extending this year’s advance to 4 percent. Aluminum, zinc, tin, lead and nickel also gained.

Supplies of copper, nickel and tin will all fall short of demand this year, according to Barclays Capital. A decade-long boom in commodities may last “a couple of years” longer before supply catches up with demand, billionaire investor George Soros said in an interview in Davos, Switzerland on Jan. 27. 

And we're already seeing the results of staples like wheat, corn, and rice being priced out of reach of the poorest.  The question is why haven't we seen huge price spikes here?

You will, just not spikes.  More like "steady boiling of the frog in the pot."