Macquarie Expects Gains in Soft Commodities on Global Demand

By Bernard Lo and Madelene Pearson

July 10 (Bloomberg) -- Macquarie Group Ltd., Australia's biggest investment bank, said global demand for food will continue to drive a rally in soft commodities.

``We're in the very early stages of an upward trend for soft commodities at the moment,'' Tim Hornibrook, director of the bank's pastoral services unit, said in an interview with Bloomberg Television today. ``Ultimately we feel the world needs food more than it needs oil, so we like the longer term fundamentals.''

The UBS Bloomberg Constant Maturity Commodity Index has gained 29 percent this year, compared with the 22 percent slump in Australia's benchmark stock index. Macquarie has established a fund to buy cattle and sheep farms in Australia.

``It's a very good time to be investing in agricultural assets, particularly with what's happening with financial assets in terms of the downward trend at the moment,'' he said today in Singapore. ``We feel the purest play is to go to the producers end and buy the farm land.''

Demand for beef is growing, driven by rising incomes in emerging markets, Hornibrook said. ``There's definitely more upside there,'' he said.

To contact the reporter on this story: Madelene Pearson in Melbourne on mpearson1@bloomberg.net; Bernard Lo in Hong Kong at blo2@bloomberg.net;