AMID ALL THE excitement this week as the crude oil price touched US$60 a barrel for the first time ever, a handful of commodity-market watchers were scratching their heads in confusion. Even as the price of oil was hitting a record high, the cost of chartering an oil tanker was falling through the floor. Unusual discrepancies were showing up in other markets, too. While the prices of bulk commodities such as soyabeans were climbing to 12-month highs on Chicago's futures markets, the cost of shipping them across the ocean had slipped to its lowest in more than a year. This sort of divergence should not happen in a rational market. In a rational market, demand for commodities would naturally drive demand for shipping, and freight rates would march in lock step with commodity prices. Instead, something strange is going on. While television pundits have lined up to explain record oil prices as the result of soaring demand from Asia, the cost of chartering a very large crude carrier from the Gulf to Japan has dropped to US$25,000 a day, down from an average US$101,000 last year. And while countless analysts have written innumerable reports expounding China's insatiable demand for coal, iron ore and wheat, the Baltic Dry Index of bulk freight rates has crashed by 60 per cent since late last year. To ship brokers like Tim Huxley, the managing director of Clarkson Asia, the decline in shipping charges is a clear indicator of falling demand for raw materials as the global economic cycle turns down. The figures supporting this view are still sketchy but they do exist. China's oil imports dropped 1.2 per cent in the first five months of the year, while international demand for copper, which is also trading at record highs, fell 5.5 per cent in the first quarter. 'Maybe commodities are overpriced,' says Mr Huxley. If they are, people like Jim Rogers are largely to blame. As co-founder with George Soros of the legendary Quantum hedge fund, Mr Rogers is widely accorded the status of a financial guru. When he talks, investors around the world pay attention and when he talks today, he is invariably bullish on raw materials. 'Get into commodities' is his blunt advice. Mr Rogers' reasoning is simple. 'No one has invested in production capacity for decades,' he says. With supplies constrained for years to come and Asia's economic emergence generating structural demand growth for raw materials, Mr Rogers believes commodities have entered a long-term bull market set to last at least until 2014. Many investors are listening to his message. In recent years, institutions have sunk an estimated US$50 billion into funds invested in indices of commodities futures contracts, including one devised by Mr Rogers himself (see chart). Over the next five years, that amount is likely to double to US$100 billion, according to Barclays Global Investors. Financiers insist that even such large sums flowing into futures markets will not be enough to interfere with a genuine supply-and-demand-driven price recovery in the underlying physical commodities. Some in the raw materials business are less sure. While many agree with the argument for a long-term bull trend in commodities, they believe the influx of money from financial investors is already distorting markets. With more investment on the way, the tendency of commodity prices to overshoot in the short term, as they appear to have done this week, is only going to get more pronounced.