WEBVTT - Teucrium's Gilbertie Sees Continued Strength in Corn (Audio) 0:00:03.840 --> 0:00:08.160 Broadcasting live to New York, Bloomberg eleventh wo to Washington, 0:00:08.240 --> 0:00:13.280 d C, Bloomberg to Boston, BLUEMBERG twelve hundreds to San Francisco, 0:00:13.400 --> 0:00:17.840 Bloomberg to the countries is exam General one nine and 0:00:17.960 --> 0:00:21.280 around the globe the Bloomberg Radio Plus app and Bloomberg 0:00:21.280 --> 0:00:25.040 got gone. This is taking stock, coming up on taking 0:00:25.120 --> 0:00:31.040 stock investment opportunities in corn, in soybeans, in bushels of wheat. 0:00:31.240 --> 0:00:34.040 We're gonna be speaking with Sal GILBERTI. He is the president, 0:00:34.080 --> 0:00:38.000 chief investment officer, and co founder of two Cream Trading. 0:00:38.240 --> 0:00:41.240 We'll get a look at investing in commodities right now. 0:00:41.440 --> 0:00:43.479 Let's get a look at news from Charlie Pellett in 0:00:43.479 --> 0:00:46.560 the Bloomberg newsroom. And I thank you very much, Pim Fox. 0:00:46.600 --> 0:00:49.240 The US Senate has passed the thirty seven point five 0:00:49.320 --> 0:00:53.120 billion dollar Energy and Water Spending bill that will provide 0:00:53.159 --> 0:00:57.560 funds for a private sector nuclear waste storage program, eight 0:00:57.560 --> 0:01:03.000 extensions of nuclear plant licenses, some finance research on wind energy. 0:01:03.480 --> 0:01:07.199 Charter Communications has one final regulatory approval to buy Time 0:01:07.240 --> 0:01:11.520 Warner Cable and become the second largest US cable providers. 0:01:11.560 --> 0:01:16.800 California authorities sign off on the merger Burlington Northern Santa 0:01:16.840 --> 0:01:19.720 Faces train speeds in the first quarter got back to 0:01:19.800 --> 0:01:23.800 two thousand thirteen levels. People familiar with familiar with the 0:01:23.840 --> 0:01:27.240 matter of say Germany's buyer is exploring a potential bid 0:01:27.280 --> 0:01:30.959 for US competitor Monceto, in a deal that would create 0:01:31.000 --> 0:01:36.120 the world's largest supplier of seeds and farm chemicals. Mancetto 0:01:36.200 --> 0:01:39.320 has a market value of about forty billion dollars. Buyers 0:01:39.440 --> 0:01:42.960 valued that not he's six billion. Diego Eduardo Ferro is 0:01:43.040 --> 0:01:46.440 co chief investment officer at Greylaw Capital Management. He says 0:01:46.520 --> 0:01:50.720 he's hoping antitrust concerns have been addressed if this deal happens. 0:01:50.760 --> 0:01:54.559 You know, it's interesting when you see so much money 0:01:55.160 --> 0:01:59.080 um deployed to these type of transactions before really doing 0:01:59.120 --> 0:02:01.240 the appropriate you needed. Just in terms of what what 0:02:01.440 --> 0:02:03.400 is likely to happen, I think the most obscene case 0:02:03.440 --> 0:02:06.720 has been recently Hollywood having to pay three four billion 0:02:06.720 --> 0:02:09.760 dollars for a film merger. Right now, we've got the 0:02:09.800 --> 0:02:13.120 Dow Jones Industrial Average advancing a thirty three points, up 0:02:13.120 --> 0:02:15.680 two tenths of one percent, the SMP hired by two 0:02:15.720 --> 0:02:19.799 points of point one percent. NASDAK little change down sixteen 0:02:19.800 --> 0:02:22.280 points to drop there of four tenths of one percent. 0:02:22.760 --> 0:02:26.080 More trouble in retail today Calls down nine point six 0:02:26.120 --> 0:02:30.040 percent after posting week results. Gold down to fifty the 0:02:30.080 --> 0:02:32.320 ounce to twelve seventy three, a drop there of two 0:02:32.360 --> 0:02:35.639 tenths of one percent, Crewed up seven tenths of one percent, 0:02:35.919 --> 0:02:39.679 forty six fifty seven apare home and now at to 0:02:39.919 --> 0:02:41.680 thirty two on Wall Street. Let's take a look at 0:02:41.680 --> 0:02:45.680 other news from around the world. Thank you Charlie from 0:02:45.680 --> 0:02:48.480 the Bloomberg News Room. My Rami in a censio. This 0:02:48.520 --> 0:02:50.720 news update is brought to you by benzel Bush Motor 0:02:50.720 --> 0:02:54.000 Car in Anglewood, New Jersey, offering a commitment to service, 0:02:54.120 --> 0:02:59.000 luxury and value with total transparency from America's premier automotive dealership. 0:02:59.200 --> 0:03:00.920 To find the way you drop, I've at benzel Bush 0:03:00.960 --> 0:03:04.799 dot com. After meeting with Republican presumptive nominee Donald Trump 0:03:04.800 --> 0:03:07.160 this morning, how Speaker Paul Ryan says he is quote 0:03:07.320 --> 0:03:10.680 totally committed to working together. Look, it's no secret that 0:03:10.720 --> 0:03:13.480 Donald Trump and I have had our differences. We talked 0:03:13.480 --> 0:03:18.760 about those differences today. That's common knowledge. Um. The question 0:03:18.880 --> 0:03:21.440 is what is it that we need to do to 0:03:21.560 --> 0:03:24.480 unify the Republican Party. Ryan has said he is not 0:03:24.600 --> 0:03:28.360 ready to endorse Trump for president. Meanwhile, Trump is narrowing 0:03:28.400 --> 0:03:31.320 down his choices of a possible running mate. Bloomberg's Michael 0:03:31.320 --> 0:03:34.639 Barr fills us in. Donald Trump is thinking about selecting 0:03:34.680 --> 0:03:39.040 former House Speaker Newt Ginbridge as his vice presidential running mate. 0:03:39.400 --> 0:03:42.840 That's according to several people familiar with the situation. The 0:03:42.880 --> 0:03:47.040 presumptive Republican presidential nominee has been asking his inner circle 0:03:47.080 --> 0:03:50.400 on Gingridge as a potential pick. Trump has said he 0:03:50.440 --> 0:03:54.720 has narrowed his vice presidential list to five or six candidates. 0:03:55.080 --> 0:03:57.720 Some of the names on the list include Oklahoma Governor 0:03:57.840 --> 0:04:02.480 Mary Fallon and former Arizona the governor Jan Brewer, Michael Barr, 0:04:02.520 --> 0:04:06.160 Bloomberg Radio. Five years in prison for Dean Skelos, the 0:04:06.200 --> 0:04:09.280 once powerful New York politician convicted of using his position 0:04:09.320 --> 0:04:12.840 as Senate majority leader to pressure companies to provide hundreds 0:04:12.840 --> 0:04:15.720 of thousands of dollars for his son, learned his fate 0:04:15.760 --> 0:04:19.200 earlier today. His son, Adam Skellos, was sentenced to six 0:04:19.240 --> 0:04:22.160 and a half years behind bars. Global News twenty four 0:04:22.200 --> 0:04:24.720 hours a day, powered by our journalists in more than 0:04:24.720 --> 0:04:27.680 one fifty news bureaus around the world. From the Bloomberg 0:04:27.680 --> 0:04:30.479 News Room, I'm Ramie in escent Cio, Charlie, and we 0:04:30.560 --> 0:04:33.839 thank you and again recapping stocks higher SMP five hundred 0:04:33.880 --> 0:04:36.720 index up point now to two thousand sixty five, a 0:04:36.800 --> 0:04:40.240 gain of point one percent. I'm Charlie Peloton. That's a 0:04:40.320 --> 0:04:45.240 Bloomberg Business flash. You're listening to taking stock with Kathleen 0:04:45.279 --> 0:04:50.080 Hay and Pim Fox on Bloomberg Radio. Drought drought is 0:04:50.200 --> 0:04:54.920 cutting the wheat production in South Africa to a four 0:04:55.240 --> 0:04:59.279 year low. The wheat crop is estimated to be cut 0:04:59.360 --> 0:05:04.200 by about eighteen percent. Does this offer an investment opportunity? 0:05:04.600 --> 0:05:07.440 Let's find out from Sal GILBERTI. He is the president 0:05:07.480 --> 0:05:10.920 and the chief investment officer and co founder of two 0:05:10.960 --> 0:05:15.520 Creum Trading LLC. He's based in Brattle Burrow, Vermont, South 0:05:15.600 --> 0:05:17.599 Thank you very much for being with us. Good to 0:05:17.600 --> 0:05:20.400 be here. Just tell us a little bit about two 0:05:20.440 --> 0:05:24.080 Creum Trading and what it is you specialize in and 0:05:24.160 --> 0:05:29.520 how you came to find this particular area of investments. Sure, um, Well, 0:05:29.520 --> 0:05:32.600 I started way back at cargill Um in the eighties, 0:05:32.640 --> 0:05:35.640 and so I've always had interest in energy and agriculture 0:05:35.720 --> 0:05:39.560 come from an agricultural family. And um, there weren't any 0:05:39.600 --> 0:05:43.360 e T s um single commodity ets available once e 0:05:43.440 --> 0:05:46.279 T S became popular with it particularly for gold and oil, 0:05:46.600 --> 0:05:49.800 for single commodity AGGS, and and for corn, which is 0:05:49.880 --> 0:05:54.880 just an enormously important crop globally. And so I started 0:05:54.920 --> 0:05:57.400 to graham with some partners and some investors, and we 0:05:57.520 --> 0:06:00.920 are the sponsors of single commodity e t F to 0:06:00.960 --> 0:06:04.400 trade on the New York Stock Exchange ETPs um. Corn 0:06:04.760 --> 0:06:07.240 is the corn fund tickers c O r N, Wheat 0:06:07.400 --> 0:06:10.320 is a wheat fund, easy tickers w E A t UH, 0:06:10.320 --> 0:06:13.680 soybeans s oy B, and sugar is kNs c A 0:06:13.839 --> 0:06:17.320 N E. And so we we believe that investors buy 0:06:17.360 --> 0:06:19.960 and large the large majority investors don't trade futures. They 0:06:19.960 --> 0:06:23.040 don't have access to futures, they don't have the expertise 0:06:23.520 --> 0:06:26.720 they need to trade a leverage product like that. And 0:06:27.240 --> 0:06:29.680 we develop these et p s in order for the 0:06:29.680 --> 0:06:34.600 the average investor, M retailing institutional to gain direct exposure 0:06:34.640 --> 0:06:37.120 to these important agricultural products right on the New York 0:06:37.120 --> 0:06:39.640 Stock Exchange. Well, so let's speak and by talking about 0:06:39.680 --> 0:06:42.320 corn then because I note that corn futures for July 0:06:42.520 --> 0:06:45.480 delivery up about one percent to three dollars and eighty 0:06:45.560 --> 0:06:50.400 two cents a bushel tell us about the long term 0:06:50.480 --> 0:06:53.920 trends in corn. Long term trends and corn, along with 0:06:54.279 --> 0:06:57.880 soybeans and wheat, are the usage continues to increase. It's 0:06:57.960 --> 0:07:02.520 it's primarily driven by population growth. Globally, the population expands 0:07:02.600 --> 0:07:06.080 by roughly seventy five to seventy eight million people per year, 0:07:06.360 --> 0:07:08.480 which is to put that in perspective, it's hard for 0:07:08.480 --> 0:07:11.800 me to grasp those numbers. That's two states of California. 0:07:11.800 --> 0:07:14.600 It's the equivalent of the population of California doubling every 0:07:14.680 --> 0:07:17.760 year as new added population on the planet Earth. And 0:07:17.800 --> 0:07:21.560 in order to sustain the use of of the agricultural 0:07:21.560 --> 0:07:24.760 commodities that all those people use, you would need arable 0:07:24.880 --> 0:07:28.760 land added to what is already arable land, um twice 0:07:28.760 --> 0:07:31.320 the size of Vermont. That land area to be added 0:07:31.760 --> 0:07:34.520 every year just to feed the new people and corn, 0:07:34.920 --> 0:07:36.760 corners and everything. If you if you go to fill 0:07:36.840 --> 0:07:39.440 up your suv a service station, UM, You're going to 0:07:39.560 --> 0:07:41.760 use about a bushel of corn because of the ethanol 0:07:41.800 --> 0:07:44.680 content of that gasoline. That's corn's number one use in 0:07:44.680 --> 0:07:48.240 the United States, it's actually the number two used globally. Globally, 0:07:48.520 --> 0:07:51.600 the number one used for corn is animal feed and 0:07:51.640 --> 0:07:54.560 so any meats that you consume, any animal proteins that 0:07:54.600 --> 0:07:58.080 you can sue, including aquacultural raised fish, that's going to 0:07:58.200 --> 0:08:01.120 use corn as well. That's corns second largest use. If 0:08:01.120 --> 0:08:03.880 you use paper, you're looking at corn starch to hold 0:08:03.960 --> 0:08:06.560 that together. If you drink sweet and drinks corn syrup. 0:08:06.800 --> 0:08:09.000 Those are corn top four uses. They you know, the 0:08:09.040 --> 0:08:11.280 little plastic cups should get at summertime picnics with the 0:08:11.320 --> 0:08:14.720 green stripe around them, they're made from corn. Um. Consumers 0:08:15.080 --> 0:08:19.920 in the modern global economy cannot exist without corn touching 0:08:19.960 --> 0:08:23.720 their lives during the day, every day in multiple spots. 0:08:23.760 --> 0:08:27.760 And so corn is an incredibly critical commodity that people 0:08:28.000 --> 0:08:30.840 should look at with their financial advisors, because you know, 0:08:30.880 --> 0:08:33.640 most people with whom we speak they have oil exposure. 0:08:33.640 --> 0:08:36.120 They understand that no matter what happens to the economy, 0:08:36.160 --> 0:08:38.040 they're gonna get up, they're gonna turn their heat on 0:08:38.120 --> 0:08:41.360 or off, they're going to drive their car um, They're 0:08:41.400 --> 0:08:43.920 going to use energy, but they're also going to use food, 0:08:44.040 --> 0:08:46.920 and they're going to use the products that also UM 0:08:47.160 --> 0:08:50.959 are derived from these these crops of corn, soybeans, and 0:08:50.960 --> 0:08:54.480 wheat in particular, So you're bullish on the price action 0:08:54.640 --> 0:08:58.960 in corn, soybeans, and wheat UM. I think when you 0:08:59.040 --> 0:09:01.920 step back and look at it, the global demand is 0:09:01.960 --> 0:09:06.640 such that I'm definitely bullish on usage. So I have 0:09:06.760 --> 0:09:08.960 no doubt that we will use more of those commodities 0:09:09.000 --> 0:09:11.200 over time as time goes on deep into the future. 0:09:11.400 --> 0:09:13.880 In terms of price action, you know, we've seen global 0:09:13.920 --> 0:09:15.880 usage going up, but the past three years have been 0:09:15.880 --> 0:09:18.679 in deep bear markets for for all of these commodities, 0:09:18.840 --> 0:09:22.200 and the reason is that they're supply driven. The demand 0:09:22.280 --> 0:09:26.160 is very steady, it's very inelastic. Farmers respond very quickly, 0:09:26.480 --> 0:09:29.080 and so what you have is we've had perfect weather 0:09:29.160 --> 0:09:33.280 for three consecutive years and that's given us um ample crops, 0:09:33.360 --> 0:09:39.240 ample supplies. But with the usage basically unrelenting, it's growing 0:09:39.800 --> 0:09:43.600 at an amazing rate, particularly soybeans and China China UM. 0:09:43.920 --> 0:09:46.080 You know their economy. I was just listening to a 0:09:46.080 --> 0:09:49.400 webinar from JPMorgan Asset Management. They were highlighting how the 0:09:49.559 --> 0:09:54.200 Chinese GDP contribution to growth has declines in two thousand nine, 0:09:54.280 --> 0:09:57.880 yet the imports of soybeans, of rocketed So I find 0:09:57.920 --> 0:10:00.720 it very interesting that the last thing people will do 0:10:00.840 --> 0:10:03.600 is allow themselves or the animals to be cold or hungry, 0:10:04.000 --> 0:10:08.160 and yet many people overlook agricultural commodity is a key 0:10:08.200 --> 0:10:11.880 component of exposure in their portfolios. Now, so you begin 0:10:11.960 --> 0:10:15.439 by just talking about futures, is using e t ps? 0:10:15.520 --> 0:10:20.160 Is that less volatile than futures trading? Uh? Not necessarily 0:10:20.240 --> 0:10:24.319 e tps because they hold futures and are there unleveraged UM. 0:10:24.440 --> 0:10:26.520 So you know, they make it pretty easy to understand. 0:10:26.760 --> 0:10:28.800 But because they hold futures, they are likely to be 0:10:28.880 --> 0:10:32.120 as volatile as futures. I think the advantage to using 0:10:32.120 --> 0:10:34.960 an et P is one doesn't need the expertise to 0:10:35.120 --> 0:10:39.080 deal with UM the leverage the futures entail, and one 0:10:39.080 --> 0:10:42.800 doesn't need the expertise to roll. Remember, contracts expire and 0:10:42.880 --> 0:10:45.720 you have to either do something about that if you 0:10:45.760 --> 0:10:47.480 own it, or you know, a whole bunch of corn 0:10:47.880 --> 0:10:50.960 roll it every month. Thank you very much, Sal GILBERTI. 0:10:51.120 --> 0:10:53.280 He is the president and the chief investment officer and 0:10:53.360 --> 0:10:58.040 co founder of two Creum Trading. They're based in Brattleborough, Vermont. 0:11:00.600 --> 0:11:03.240 Bloomer Taking Stock is brought to by Autie Metal Ends 0:11:03.240 --> 0:11:06.000 in Secauka's New Jersey, powered by Benzel Bush, offering a 0:11:06.000 --> 0:11:09.600 commitment to service, luxury and value with total transparency. Start 0:11:09.600 --> 0:11:11.800 your journey at Audie medal ends dot net and define 0:11:11.840 --> 0:11:12.840 the way you drive.