LONDON (Reuters) - New money is pouring into commodity markets because supply shortages mean rising prices and high returns for investors, investment guru Jim Rogers told Reuters on Tuesday.

Some analysts say commodities this year have experienced a bubble, which will quickly deflate when short-term investors pull out, but along with large institutions such as pension funds, Rogers is in the market for the long term.

"Yes, there is always new money. That always happens in bull markets, because that's where the opportunities are," he said in an interview.

"Money will go into assets that are fundamentally strong. The only markets I know that are fundamentally positive are commodities, where there are serious supply shortages."

Rogers cited the example of crude oil, which is trading near record highs above $100 a barrel. "People have been telling me for five years that oil prices are going down.

"Every time I ask them where the supply is coming from. So far, nobody has been able to tell me. Please tell me where the new oil is because I want to invest in it."

Other fund managers agree. They say the problem is many analysts only forecast demand, which is accelerating partly because of growing affluence in emerging markets, and assume supplies will keep up.

Supply problems and historically low inventories are not just a feature of oil markets.

"Shortages are developing because production is declining ... Oil fields are in decline, copper mines are in decline," he said.

"Whether it's oil, wheat or sugar, the world does not have new production capacity."

GOLD COINS

Rogers only invests in exchange traded securities, with the one exception being gold coins.

Agricultural investments include listed stocks with farmland holdings and underlying futures such as wheat contracts.

"There are enormous opportunities in farmland if you are a good farmer. Even if you are a mediocre farmer you can make a lot of money," he said.

"Farming is going to be one of the best places to make money in the next 10 years, if you know what you are doing."

But Rogers said he is not a farmer and has instead invested in the sector through listed companies with holdings in places like Australia and Brazil.

"If I bought a farm, I would probably lose a fortune," he said, adding that demand for grains was rising because of rising living standards.

"The fact that the price of oil is at all-time highs means that people are going to use more sugar for ethanol."

Record high oil prices also mean strong demand for commodities like cotton. "Synthetic fibres come from oil, people will try to use more natural fibres," he said.

(Source)⇒Reuters