What is food and oil? Energy. Energy is rallying again. But how is that possible given the state of the economy? Easy. Human population growth.

Something funny has been happening in the commodities trade. After spectacular plunges, the prices of oil, copper, palm oil and others are rallying. This shouldn't be happening given the parlous state of the world economy. The International Monetary Fund this week cut its global growth forecast for 2009, predicting GDP would contract by 1.3%, the most severe recession since the 1930s. Yet oil is some 50% more expensive now than in December. Palm oil, which is used in a wide variety of manufactured foods, has surged by about 50% this year. "The only area of the world economy I know of where the fundamentals are improving are commodities," says investment guru Jim Rogers. "The fundamentals for General Motors are not improving. The fundamentals for Citibank are not improving. The fundamentals for cotton are improving."

clipped from www.time.com "The only area of the world economy I know of where the fundamentals are improving are commodities," says investment guru Jim Rogers. "The fundamentals for General Motors are not improving. The fundamentals for Citibank are not improving. The fundamentals for cotton are improving." But why are prices rising for some commodities now, in the middle of the worst recession in decades? The answer: demand is recovering, slightly, for some raw materials. In the case of oil, supplies have been reduced by OPEC cutbacks. And commodities traders are bidding up market prices in general on expectations that supply shortages will return with just a modest improvement in demand. "If the world economy is going to improve, commodities are going to be the best place to be," asserts Rogers. "If the world economy doesn't improve, commodities are going to be the best place to be." Anyone for a truckload of soybeans?