1 00:00:09,160 --> 00:00:13,360 Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast. 2 00:00:13,480 --> 00:00:17,239 Speaker 1: I'm Joe Wisenthal and I'm Tracy Alloway. You know, Tracy, 3 00:00:17,320 --> 00:00:20,319 Speaker 1: I think we tooked a few weeks ago, on maybe 4 00:00:20,320 --> 00:00:22,720 Speaker 1: a month ago. I lose track of the time about 5 00:00:22,800 --> 00:00:26,200 Speaker 1: how there wasn't very much volatility in markets these days 6 00:00:26,239 --> 00:00:28,680 Speaker 1: and it was kind of a source of frustration for 7 00:00:29,080 --> 00:00:32,800 Speaker 1: markets journalists. Yeah, we talked about that a lot, I feel, yeah, 8 00:00:33,040 --> 00:00:35,200 Speaker 1: you know, we're always talking about it internally. I forget 9 00:00:35,200 --> 00:00:38,240 Speaker 1: which episode it brought it up on. Maybe there's a 10 00:00:38,280 --> 00:00:40,440 Speaker 1: little bit of market volatility picked up, but it's still 11 00:00:40,520 --> 00:00:42,680 Speaker 1: kind of a big issue that, you know, where is 12 00:00:42,720 --> 00:00:46,239 Speaker 1: the volatility? It's very boring. Are you going to tell 13 00:00:46,280 --> 00:00:50,159 Speaker 1: me that you've actually found some volatility in the market. Yes, Tracy, 14 00:00:50,440 --> 00:00:53,440 Speaker 1: I have some great news for you. I have found 15 00:00:53,640 --> 00:00:57,240 Speaker 1: the volatility in the market. I have found a corner 16 00:00:57,360 --> 00:01:00,520 Speaker 1: of the market that is not boring at all, that 17 00:01:00,720 --> 00:01:03,800 Speaker 1: is thrilling every day. And not only that, it's not 18 00:01:03,880 --> 00:01:06,560 Speaker 1: even that obscure, it's actually one of the it's a 19 00:01:06,600 --> 00:01:09,760 Speaker 1: crucial market for the entire Really, part of me doesn't 20 00:01:09,840 --> 00:01:12,360 Speaker 1: want to ask because I think it will be really obscure, 21 00:01:12,440 --> 00:01:15,640 Speaker 1: But Okay, what is it. No, it's not obscure. I'm 22 00:01:15,680 --> 00:01:19,520 Speaker 1: not gonna like site like, you know, the spread between 23 00:01:19,959 --> 00:01:24,880 Speaker 1: Norwegian frozen salmon and Norwegian fresh salmon or anything anything 24 00:01:24,920 --> 00:01:28,000 Speaker 1: like this. Uh No, the answer is the grains market. 25 00:01:29,400 --> 00:01:32,440 Speaker 1: All right, you said it wasn't obscure. Well, come on, 26 00:01:32,600 --> 00:01:35,880 Speaker 1: grains are not obscure. I mean most people bread all 27 00:01:35,880 --> 00:01:40,600 Speaker 1: the time, and cereal and uh you know, soft agricultural 28 00:01:40,640 --> 00:01:44,039 Speaker 1: commodities are. Okay, I'm pretty important to most people. I 29 00:01:44,080 --> 00:01:46,280 Speaker 1: know they're a big part of life. But I guess 30 00:01:46,319 --> 00:01:49,120 Speaker 1: when people think about the market, they don't necessarily think 31 00:01:49,160 --> 00:01:52,680 Speaker 1: about the commodities market, even though I suppose in fairness 32 00:01:52,760 --> 00:01:56,640 Speaker 1: a lot of the current financial instruments that we have 33 00:01:56,920 --> 00:02:01,480 Speaker 1: in markets actually developed from boies, right, like futures, I 34 00:02:01,480 --> 00:02:06,120 Speaker 1: think we're originally commodities oriented. Every time you read about 35 00:02:06,120 --> 00:02:09,880 Speaker 1: the history of futures markets, it starts with some made 36 00:02:09,960 --> 00:02:14,360 Speaker 1: up story, some some fantasy story about the farmer plants 37 00:02:14,480 --> 00:02:16,560 Speaker 1: the corn and wants the lock of the price and 38 00:02:16,680 --> 00:02:19,679 Speaker 1: sells it to the speculator. You know, that's like, that's 39 00:02:19,720 --> 00:02:25,280 Speaker 1: the classic description of how commodity futures work. And guess 40 00:02:25,280 --> 00:02:27,840 Speaker 1: what that's exactly what we're gonna be talking about today, 41 00:02:27,919 --> 00:02:32,520 Speaker 1: because the action in grains lately, particularly in wheat, but 42 00:02:32,600 --> 00:02:37,720 Speaker 1: also sort soybeans and corn, has been very exciting and volatile, 43 00:02:37,800 --> 00:02:40,320 Speaker 1: and if you like charts that go up and down 44 00:02:40,440 --> 00:02:44,079 Speaker 1: very fast, you should be paying attention to grains. All right. Well, 45 00:02:44,120 --> 00:02:47,480 Speaker 1: I've always had a soft spot for commodities, mostly because 46 00:02:47,520 --> 00:02:52,119 Speaker 1: I'm amused by the notion of accidentally taking physical delivery 47 00:02:52,280 --> 00:02:55,520 Speaker 1: of like a bushel of corn or something. But I'm 48 00:02:55,560 --> 00:02:57,880 Speaker 1: looking forward to this episode because, as you say, we 49 00:02:58,000 --> 00:03:01,440 Speaker 1: need a little bit of excitement in markets now exactly. 50 00:03:01,600 --> 00:03:04,600 Speaker 1: And so today on the Outlaws podcast, we're going to 51 00:03:04,680 --> 00:03:08,679 Speaker 1: be talking to Tommy Grisafi. He is a risk manager 52 00:03:08,880 --> 00:03:12,679 Speaker 1: at Advanced Trading, which is a firm that helps players 53 00:03:12,800 --> 00:03:18,120 Speaker 1: in the agricultural space farmers, grain elevator operators, hedge and 54 00:03:18,240 --> 00:03:21,680 Speaker 1: manage their risks. So right, you know, basically right in 55 00:03:21,720 --> 00:03:25,040 Speaker 1: this whole story of why the futures market exists, and 56 00:03:25,120 --> 00:03:38,920 Speaker 1: in addition to that, he trades these futures himself. Tommy, 57 00:03:38,960 --> 00:03:42,000 Speaker 1: thank you very much for joining us. Thank you, thank you, Joe. 58 00:03:42,000 --> 00:03:44,360 Speaker 1: It's a pleasure to be here, and what exciting time 59 00:03:44,400 --> 00:03:48,760 Speaker 1: in the agricultural space. I I was listening before, and yes, 60 00:03:48,800 --> 00:03:51,520 Speaker 1: it's very boring time in commodities. It's been a rough 61 00:03:51,560 --> 00:03:54,640 Speaker 1: go for commodity traders the last few years. Someone who 62 00:03:54,680 --> 00:03:57,320 Speaker 1: trades gold or crude oil, it's just it's just not 63 00:03:57,480 --> 00:03:59,280 Speaker 1: sexy like it used to be when I first met 64 00:03:59,320 --> 00:04:01,839 Speaker 1: you on Twitter in O eight oh nine, and yeah, 65 00:04:01,880 --> 00:04:04,880 Speaker 1: those were what I miss and I say, Corn's limit down. 66 00:04:05,000 --> 00:04:08,720 Speaker 1: And you know, think about when the Fukushima accident happened 67 00:04:08,760 --> 00:04:11,880 Speaker 1: in Japan, how crazy we were, and it's it's just changed, 68 00:04:12,040 --> 00:04:14,280 Speaker 1: and there's a lot of reasons why it's changed. But 69 00:04:14,600 --> 00:04:16,800 Speaker 1: you know, let's move forward. You know, you can't look back. 70 00:04:16,800 --> 00:04:18,840 Speaker 1: All we have is where we are today, right right, 71 00:04:18,920 --> 00:04:21,000 Speaker 1: and what we have today. You know, as you said 72 00:04:21,000 --> 00:04:23,240 Speaker 1: that a lot of the markets aren't very sexy right 73 00:04:23,320 --> 00:04:27,400 Speaker 1: now from a volatility perspective. But one market that is 74 00:04:27,520 --> 00:04:30,160 Speaker 1: very sexy is the wheat market and that's been, uh, 75 00:04:30,279 --> 00:04:33,280 Speaker 1: that's been going absolutely wildly. Yeah, for those of us 76 00:04:33,320 --> 00:04:36,760 Speaker 1: who haven't For those of us who haven't been following 77 00:04:37,160 --> 00:04:39,840 Speaker 1: the wheat market as much as we should, Tommy, can 78 00:04:39,839 --> 00:04:41,719 Speaker 1: you give us a sort of high level overview of 79 00:04:41,760 --> 00:04:46,000 Speaker 1: what's been happening. Sure, there's three wheat futures. There's one 80 00:04:46,040 --> 00:04:49,560 Speaker 1: that Minneapolis Grain Exchange sets up in Minneapolis. There's the 81 00:04:49,640 --> 00:04:52,720 Speaker 1: Kansas City Border Trade which was bought by the Semi Group, 82 00:04:52,720 --> 00:04:54,880 Speaker 1: but it was in Kansas City. And then there's the 83 00:04:54,920 --> 00:04:58,040 Speaker 1: Border Trade Wheat contract, which probably has the deepest, most 84 00:04:58,120 --> 00:05:02,240 Speaker 1: liquid e but wheat snapped wheat. So I have a 85 00:05:02,279 --> 00:05:05,680 Speaker 1: customer who grows wheat in North Dakota, it goes to 86 00:05:05,760 --> 00:05:08,440 Speaker 1: North Dakota mill, gets put on a truck, and that 87 00:05:08,480 --> 00:05:10,480 Speaker 1: truck brings that flour all the way to New York. 88 00:05:10,839 --> 00:05:12,880 Speaker 1: And that's what that wheat up there is what's used 89 00:05:12,920 --> 00:05:14,960 Speaker 1: in your pizza dough and your bagels that New York's 90 00:05:15,000 --> 00:05:18,600 Speaker 1: famous for. And I'm sure we could all relate. It's 91 00:05:18,640 --> 00:05:21,960 Speaker 1: also the high gluten wheat. So if you're into the 92 00:05:21,960 --> 00:05:24,719 Speaker 1: gluten free, you're probably not eating much of that. So 93 00:05:25,680 --> 00:05:28,000 Speaker 1: then you have your casey wheat that's your traditional breads 94 00:05:28,000 --> 00:05:30,080 Speaker 1: and whatnot. And then you have your board of trade wheat, 95 00:05:30,279 --> 00:05:32,800 Speaker 1: which would be like a cracker. And so wheat's not wheat. 96 00:05:33,360 --> 00:05:36,440 Speaker 1: It's graded by proteins. And you'll you'll read tweets or 97 00:05:36,440 --> 00:05:39,280 Speaker 1: you'll hear information they're bidding up protein and you may 98 00:05:39,320 --> 00:05:42,000 Speaker 1: not have understood what that meant, but now you will. Oh. 99 00:05:42,080 --> 00:05:44,919 Speaker 1: I always thought protein referred to the animal like a 100 00:05:45,000 --> 00:05:48,560 Speaker 1: hog or cow. But when people say they're bidding a protein, 101 00:05:49,120 --> 00:05:52,160 Speaker 1: it means that the wheat with the higher protein content 102 00:05:52,279 --> 00:05:56,120 Speaker 1: that stuff up in Minneapolis is selling for premium. Exactly, 103 00:05:56,160 --> 00:05:59,560 Speaker 1: it can trade for dollars over so currently, Uh, you know, 104 00:05:59,720 --> 00:06:01,960 Speaker 1: weat a couple of dollars over the other weeks, and 105 00:06:02,040 --> 00:06:05,360 Speaker 1: so there's people who spread all three weeks against each other. 106 00:06:05,400 --> 00:06:07,760 Speaker 1: You could buy Minneapolis, sell the board. You could buy Many, 107 00:06:07,839 --> 00:06:10,320 Speaker 1: sell Kansas City. You could sell many and buy the 108 00:06:10,360 --> 00:06:13,440 Speaker 1: other two. And lots of combinations, lots of spreading going on, 109 00:06:13,600 --> 00:06:18,120 Speaker 1: lots of lots of fun, and unfortunately it's it's been 110 00:06:18,200 --> 00:06:21,839 Speaker 1: slow for quite a while. And that's how I ended 111 00:06:21,920 --> 00:06:24,880 Speaker 1: up with this position that advanced trading was they said, 112 00:06:25,279 --> 00:06:27,480 Speaker 1: I love the grains, I love the commodities. How can 113 00:06:27,520 --> 00:06:29,479 Speaker 1: I go help people? I went down to the border 114 00:06:29,520 --> 00:06:34,120 Speaker 1: trade on a high school field trip, and uh, if you, 115 00:06:34,279 --> 00:06:36,280 Speaker 1: if you eat three meals a day, you're affected by 116 00:06:36,279 --> 00:06:38,960 Speaker 1: agg How can I go educate the American farmer on 117 00:06:39,000 --> 00:06:41,480 Speaker 1: how to better use these products? That's how you ended 118 00:06:41,520 --> 00:06:45,120 Speaker 1: up in North Dakota. I realized, and this is important 119 00:06:45,120 --> 00:06:48,200 Speaker 1: where you could use it in other segments of Bloomberg 120 00:06:48,200 --> 00:06:51,920 Speaker 1: and Finances. That technology has changed. So when you talk 121 00:06:51,920 --> 00:06:54,880 Speaker 1: about a stock like Montsano, Tommy, how are they how 122 00:06:54,880 --> 00:06:56,640 Speaker 1: do you have a customer who's two miles from the 123 00:06:56,640 --> 00:07:00,400 Speaker 1: North Dakota board North Canada border growing wheat and corn 124 00:07:00,440 --> 00:07:03,080 Speaker 1: and beans. And so when these big crops come along 125 00:07:03,120 --> 00:07:05,680 Speaker 1: and everyone's like where they come from, it's really due 126 00:07:05,680 --> 00:07:09,120 Speaker 1: that to the recent technology and modern changes of the seed. 127 00:07:09,720 --> 00:07:13,840 Speaker 1: And uh, it's just amazing, just absolutely amazing. I just 128 00:07:13,840 --> 00:07:16,600 Speaker 1: want to say, Tracy, I've already learned so much on 129 00:07:16,680 --> 00:07:19,600 Speaker 1: this episode if with I think about two minutes in, 130 00:07:19,920 --> 00:07:23,160 Speaker 1: so this is great. I want to let's let's sort 131 00:07:23,160 --> 00:07:26,360 Speaker 1: of break things down. So we started on a little 132 00:07:26,360 --> 00:07:29,160 Speaker 1: bit about all the volatility lately. Let's back up for 133 00:07:29,200 --> 00:07:31,800 Speaker 1: a second and then return to that later. You're a 134 00:07:31,920 --> 00:07:34,880 Speaker 1: risk manager at Advanced Trading. You talked about how you 135 00:07:35,240 --> 00:07:38,800 Speaker 1: go up to the Dakota's help farmers and stuff. That 136 00:07:39,000 --> 00:07:42,119 Speaker 1: sounds like what I was talking about. That textbook story 137 00:07:42,120 --> 00:07:45,440 Speaker 1: that they always tell about how the futures market serves farmers. 138 00:07:45,920 --> 00:07:48,560 Speaker 1: Is that right? Tell us about what you do in 139 00:07:48,560 --> 00:07:52,480 Speaker 1: that capacity, you know, Joe, you couldn't be more more 140 00:07:52,520 --> 00:07:54,800 Speaker 1: on the money. And so the border trade in the 141 00:07:54,880 --> 00:07:58,760 Speaker 1: Semi group and the Minneapolis Grain Exchange. The Minneapolis Grain 142 00:07:58,800 --> 00:08:01,880 Speaker 1: Exchange was actually formed by members of the Cargill family. 143 00:08:02,160 --> 00:08:03,800 Speaker 1: So you want to talk about old money, there you 144 00:08:03,840 --> 00:08:06,480 Speaker 1: have it. I could send you a little tidbit, you know, 145 00:08:06,600 --> 00:08:10,160 Speaker 1: for you to read. So the old days, a farmer 146 00:08:10,200 --> 00:08:12,320 Speaker 1: would see the prices were higher, and they would put 147 00:08:12,360 --> 00:08:14,320 Speaker 1: their wheat on a horse and buggy and bring it 148 00:08:14,360 --> 00:08:16,520 Speaker 1: to Minneapolis, and by the time they got there, the 149 00:08:16,560 --> 00:08:20,200 Speaker 1: market would collapse. They said, this just isn't right. They said, 150 00:08:20,400 --> 00:08:22,720 Speaker 1: I wish we had something to determine the price of 151 00:08:22,800 --> 00:08:24,760 Speaker 1: what it was in the future. And that's how futures 152 00:08:24,760 --> 00:08:29,520 Speaker 1: market started in Chicago with corn, wheat and beans and butter. 153 00:08:29,920 --> 00:08:31,920 Speaker 1: And you read, you know, those are the classic Jesse 154 00:08:32,080 --> 00:08:35,079 Speaker 1: Livermore stories. When you read Reminiscence of a Stock Operator, 155 00:08:35,360 --> 00:08:38,040 Speaker 1: anyone listening, you know, buy it on audio taper. Read 156 00:08:38,080 --> 00:08:40,360 Speaker 1: the book. If you haven't, if you're involved in commodities, 157 00:08:40,360 --> 00:08:42,360 Speaker 1: there's no way you haven't read that book. And it's 158 00:08:42,360 --> 00:08:46,800 Speaker 1: the old school commodity trading. And uh, the futures markets 159 00:08:47,600 --> 00:08:50,760 Speaker 1: are very They were very influential to the modern day 160 00:08:50,760 --> 00:08:54,280 Speaker 1: stock market and very influential to the options market because 161 00:08:54,320 --> 00:08:57,600 Speaker 1: they started trading options on futures before they started trading 162 00:08:57,640 --> 00:09:00,080 Speaker 1: options on stocks, and that's how the Chicago Board of 163 00:09:00,120 --> 00:09:03,440 Speaker 1: Options Exchange was started. But nonetheless, going to you original question, 164 00:09:03,559 --> 00:09:06,559 Speaker 1: So I'm up in North Dakota where technology has changed. 165 00:09:06,600 --> 00:09:10,079 Speaker 1: They have beautiful, uh, fertile dirt in the Red River Valley, 166 00:09:10,080 --> 00:09:12,480 Speaker 1: which anyone who is snapped familiar with. There there's a 167 00:09:12,520 --> 00:09:15,560 Speaker 1: red there's a river called the Red River. It flows north. 168 00:09:15,840 --> 00:09:17,520 Speaker 1: It's one of only two rivers I believe in the 169 00:09:17,559 --> 00:09:20,000 Speaker 1: world to flow from south to north. Then it goes 170 00:09:20,080 --> 00:09:22,400 Speaker 1: up to Winnipeg. And so when you're in North Dakota 171 00:09:22,440 --> 00:09:24,480 Speaker 1: and it rains, your water actually goes up to Canada 172 00:09:24,480 --> 00:09:26,720 Speaker 1: if you're along the Red River. But this soil along 173 00:09:26,760 --> 00:09:30,080 Speaker 1: the Red River Valley is so fertile. And technology changed 174 00:09:30,120 --> 00:09:32,319 Speaker 1: over the last twenty years, and so did the climate. 175 00:09:32,360 --> 00:09:35,160 Speaker 1: It started raining more up in the Dakotas. Not this year, 176 00:09:35,400 --> 00:09:37,840 Speaker 1: but just in general it started raining more. And so 177 00:09:37,920 --> 00:09:41,640 Speaker 1: you have this beautiful fertile soil, the seed that in 178 00:09:41,679 --> 00:09:44,560 Speaker 1: the old days, Joe and Tracy you'd plan a corn 179 00:09:44,600 --> 00:09:46,640 Speaker 1: seed and you needed about a hundred days for it 180 00:09:46,679 --> 00:09:49,760 Speaker 1: to mature. They can have they have corn seed. Now 181 00:09:49,760 --> 00:09:51,679 Speaker 1: that's seventy day corn seeds. So you plan it in 182 00:09:51,720 --> 00:09:54,280 Speaker 1: the ground, seventy days later, the plants mature and you're 183 00:09:54,280 --> 00:09:57,600 Speaker 1: harvesting it. So a lot's change in technology. So the 184 00:09:57,640 --> 00:10:00,559 Speaker 1: folks up and from the Chicago border tre to Fargo, 185 00:10:00,600 --> 00:10:03,640 Speaker 1: North Dakota seven and fifty miles, and those folks up 186 00:10:03,640 --> 00:10:06,760 Speaker 1: there couldn't feel more removed from the price action at 187 00:10:06,760 --> 00:10:10,720 Speaker 1: the Border Trade, the Semi Group and the Minneapolis Screen Exchange. 188 00:10:10,720 --> 00:10:12,360 Speaker 1: And so I'm actually up there. I have a place 189 00:10:12,440 --> 00:10:15,880 Speaker 1: up there now in office and a apartment, and I'm 190 00:10:16,160 --> 00:10:19,040 Speaker 1: they're educating people like the old fashioned brokers used to 191 00:10:19,080 --> 00:10:22,080 Speaker 1: do in the sixties and seventies and eighties and say, hey, 192 00:10:22,120 --> 00:10:24,559 Speaker 1: this is a future. But what's neat is with these 193 00:10:24,600 --> 00:10:26,599 Speaker 1: options they could actually manage your risk. And I'm not 194 00:10:26,600 --> 00:10:28,840 Speaker 1: going to teach you guys anything about options. I know 195 00:10:28,920 --> 00:10:31,040 Speaker 1: you know a lot about it. But the farmers felt 196 00:10:31,120 --> 00:10:35,040 Speaker 1: removed from the exchange. But as you know, futures are 197 00:10:35,440 --> 00:10:38,800 Speaker 1: electronic now, so there's no difference if I'm sitting in 198 00:10:38,840 --> 00:10:41,880 Speaker 1: my home in Valparaiso, Indiana, or my office at the 199 00:10:41,880 --> 00:10:44,440 Speaker 1: Border Trade or my office in North Dakota. A matter 200 00:10:44,440 --> 00:10:45,960 Speaker 1: of fact, no one even knows where I am. I 201 00:10:46,000 --> 00:10:48,319 Speaker 1: have on the big fancy computers with eight screens and 202 00:10:48,760 --> 00:10:51,680 Speaker 1: the Cisco voice over IP phone. No one knows where 203 00:10:51,679 --> 00:10:54,559 Speaker 1: you are. And so I'm up there educating people, showing 204 00:10:54,600 --> 00:10:56,360 Speaker 1: them how to manage risks. Say, hey, I don't know 205 00:10:56,400 --> 00:10:58,559 Speaker 1: why wheats going up a dollar a day, But did 206 00:10:58,559 --> 00:11:00,480 Speaker 1: you know you could set the floor with a adoption? 207 00:11:00,840 --> 00:11:04,760 Speaker 1: And so there's an education process no different than people 208 00:11:04,800 --> 00:11:08,000 Speaker 1: who had to learn, you know, the stock market education 209 00:11:08,040 --> 00:11:11,199 Speaker 1: with these options the last twenty years. Wait, temmy, I'm 210 00:11:11,200 --> 00:11:14,240 Speaker 1: still thinking about you know, the classic story of the 211 00:11:14,280 --> 00:11:17,640 Speaker 1: farmer who wants to kind of ensure his crop output. 212 00:11:17,760 --> 00:11:20,800 Speaker 1: So when you come up with the futures contract for that, 213 00:11:21,280 --> 00:11:25,440 Speaker 1: how do you get two sides of the trade. Like, 214 00:11:25,679 --> 00:11:28,599 Speaker 1: surely all the farmers back then we're looking at the 215 00:11:28,640 --> 00:11:31,160 Speaker 1: same information and they were all thinking, well, you know, 216 00:11:31,600 --> 00:11:33,800 Speaker 1: there might be a drought next year, and so I 217 00:11:33,840 --> 00:11:36,960 Speaker 1: want the following protection. Who's taking the other side of 218 00:11:37,000 --> 00:11:40,120 Speaker 1: that trade? And what are they looking at that the 219 00:11:40,240 --> 00:11:43,280 Speaker 1: farmers aren't sure? That's a great question. Are you talking 220 00:11:43,320 --> 00:11:46,840 Speaker 1: about years ago or modern day trading now? Or well, 221 00:11:46,880 --> 00:11:48,920 Speaker 1: I guess I'm curious about both, Like what was it 222 00:11:48,960 --> 00:11:53,160 Speaker 1: like years ago and what's it like now? Well, it's 223 00:11:53,360 --> 00:11:56,679 Speaker 1: much more fast paced now very hard with this electronic 224 00:11:56,760 --> 00:12:00,120 Speaker 1: markets and high frequency trading. One thing the farmers missing 225 00:12:00,200 --> 00:12:02,480 Speaker 1: is they see the market go up, and they always 226 00:12:02,480 --> 00:12:04,880 Speaker 1: think they'll have time to sell it. The second thing 227 00:12:05,000 --> 00:12:07,959 Speaker 1: is is the whole world super focused on the stock market? 228 00:12:08,000 --> 00:12:10,720 Speaker 1: Because what the stock market do the recent a few weeks, 229 00:12:10,800 --> 00:12:12,760 Speaker 1: or what's it do every day? When I watched Bloomberg, 230 00:12:13,040 --> 00:12:16,679 Speaker 1: Dow Jones New highs, it just it's a NonStop machine. 231 00:12:16,720 --> 00:12:19,520 Speaker 1: Maybe someday it'll go down, and maybe it'll go down hard, 232 00:12:19,559 --> 00:12:21,840 Speaker 1: But today then every other day it seems like the 233 00:12:21,840 --> 00:12:26,000 Speaker 1: headlines are Dow Jones New High. Commodity markets are different. Again, 234 00:12:26,080 --> 00:12:28,640 Speaker 1: anyone who's eating three times a day is affected by egg. 235 00:12:28,880 --> 00:12:31,800 Speaker 1: But America is not set up. They have high egg prices. 236 00:12:32,120 --> 00:12:34,040 Speaker 1: And if you don't believe me, look what happened when 237 00:12:34,040 --> 00:12:36,439 Speaker 1: corn went to eight dollars. It about put the dairy 238 00:12:36,480 --> 00:12:39,280 Speaker 1: industry out of business, It about put the hog industry, 239 00:12:39,320 --> 00:12:41,920 Speaker 1: the cattle industry, and and so America is set up 240 00:12:41,960 --> 00:12:45,080 Speaker 1: to run on affordable food. Matter of fact, when you 241 00:12:45,080 --> 00:12:47,800 Speaker 1: look at the farm bills, it's called the Affordable Food Act. 242 00:12:47,880 --> 00:12:50,640 Speaker 1: So to your question, things move a lot different now. 243 00:12:50,720 --> 00:12:53,760 Speaker 1: Fifty years ago they didn't have options. So as far 244 00:12:53,800 --> 00:12:56,280 Speaker 1: as a bushel corn being four dollars and you being 245 00:12:56,320 --> 00:12:58,760 Speaker 1: able to spend twenty cents on a corn, put that 246 00:12:58,800 --> 00:13:02,280 Speaker 1: didn't exist if years ago. Now for twenty cents one 247 00:13:02,280 --> 00:13:05,040 Speaker 1: thousand dollars, you can set that floor. You don't know 248 00:13:05,080 --> 00:13:08,000 Speaker 1: how many bushels you're producing, but you can set that floor, 249 00:13:08,080 --> 00:13:11,360 Speaker 1: and you have something an insurance policy from four to zero. 250 00:13:11,720 --> 00:13:14,280 Speaker 1: And in the old days, people were selling futures and 251 00:13:14,320 --> 00:13:16,840 Speaker 1: that's where the big nasty story started about did you 252 00:13:16,840 --> 00:13:18,920 Speaker 1: hear about so and so he got caught in the 253 00:13:18,960 --> 00:13:21,800 Speaker 1: futures market, and so that's where the big margin calls 254 00:13:21,840 --> 00:13:24,880 Speaker 1: come from, and all the other legendary stories that we 255 00:13:24,960 --> 00:13:30,559 Speaker 1: hear about. I think it's really interesting you mentioning technology, 256 00:13:30,600 --> 00:13:33,679 Speaker 1: and I'm curious about how it changes the market in 257 00:13:33,720 --> 00:13:36,480 Speaker 1: a couple of ways. So, I mean, I don't think 258 00:13:36,480 --> 00:13:40,000 Speaker 1: people often think about that grands are sort of a 259 00:13:40,000 --> 00:13:43,960 Speaker 1: product of technology, the idea that yields improve over time, 260 00:13:44,400 --> 00:13:48,040 Speaker 1: the idea that, as you said, we can grow corn 261 00:13:48,240 --> 00:13:51,400 Speaker 1: from seed to completion in a shorter period of time. 262 00:13:51,880 --> 00:13:54,240 Speaker 1: That second aspect, the idea of being able to grow 263 00:13:54,280 --> 00:13:58,040 Speaker 1: a crop more quickly, does that mean that supply becomes 264 00:13:58,120 --> 00:14:01,319 Speaker 1: more sensitive to prices? In other words, we see if 265 00:14:01,320 --> 00:14:05,120 Speaker 1: we see a big spike and say corn and soybean 266 00:14:05,200 --> 00:14:09,200 Speaker 1: prices or big drop, that farmers can switch their crop 267 00:14:09,280 --> 00:14:12,280 Speaker 1: to respond to those price signals faster than they could 268 00:14:12,280 --> 00:14:14,800 Speaker 1: have in the old days when the lead time was 269 00:14:14,920 --> 00:14:20,800 Speaker 1: much longer. Absolutely, so, the seed companies are very accommodating that. 270 00:14:21,000 --> 00:14:23,760 Speaker 1: The dot let's talk about that real quick. There's only 271 00:14:23,800 --> 00:14:26,240 Speaker 1: a couple of seed companies left. I mean down Do 272 00:14:26,360 --> 00:14:29,000 Speaker 1: Pontter trying to merge Bear in Monsano, are trying to 273 00:14:29,120 --> 00:14:32,320 Speaker 1: merge China Camp come in and bought some Jenna. I 274 00:14:32,400 --> 00:14:35,120 Speaker 1: notice CRDA Dows spun off part of their seed group 275 00:14:35,160 --> 00:14:39,240 Speaker 1: to a Chinese company. So there's big money in this 276 00:14:39,320 --> 00:14:42,040 Speaker 1: seed business. And if there's one thing that's hurting the 277 00:14:42,120 --> 00:14:45,160 Speaker 1: American farmer, if any farmers are out there listening to 278 00:14:45,200 --> 00:14:50,200 Speaker 1: this podcast, is they've underestimated how much technology has helped them, 279 00:14:50,240 --> 00:14:55,000 Speaker 1: and they're still mentally marketing a crop like it's or 280 00:14:55,000 --> 00:14:57,760 Speaker 1: oh five, and so they're they're thinking they're gonna grow 281 00:14:57,760 --> 00:15:00,120 Speaker 1: a hundred and thirty five bushel corn, and they're on 282 00:15:00,200 --> 00:15:04,560 Speaker 1: a hundred bushell corn. And so the American farmer. If 283 00:15:04,560 --> 00:15:06,160 Speaker 1: you go to a trade show, if you go to 284 00:15:06,200 --> 00:15:10,200 Speaker 1: any egg show, there's the John Deer Tractors, There's this planter, 285 00:15:10,440 --> 00:15:14,720 Speaker 1: there's this fertilizer, there's this seed company. Tens of thousands 286 00:15:14,760 --> 00:15:17,320 Speaker 1: of farmers at these shows. You go to a marketing meeting, 287 00:15:17,440 --> 00:15:20,520 Speaker 1: there's Tommy Grisafi up there on stage talking at eighteen 288 00:15:20,560 --> 00:15:24,280 Speaker 1: farmers in nowhere, North Dakota. They don't want to talk marketing. 289 00:15:24,320 --> 00:15:28,400 Speaker 1: They want Everyone loves production agg it's fun, it's exciting, 290 00:15:28,480 --> 00:15:31,800 Speaker 1: it's sexy, it's fun driving a tractor. If you ever haven't, 291 00:15:32,160 --> 00:15:33,720 Speaker 1: give me a call and we'll set you up with 292 00:15:33,760 --> 00:15:35,520 Speaker 1: one of the customers I have in Pennsylvania and you 293 00:15:35,560 --> 00:15:37,920 Speaker 1: go out there and interview them, and it's fun. It's 294 00:15:37,920 --> 00:15:40,320 Speaker 1: one of the best jobs you can have in America. 295 00:15:40,560 --> 00:15:42,520 Speaker 1: It's not one of the most profitable anymore, but it's 296 00:15:42,560 --> 00:15:46,760 Speaker 1: one of the best jobs you can have. And so technology, Uh, 297 00:15:46,800 --> 00:15:50,560 Speaker 1: there's things like auto Stair. There's a tractor being developed 298 00:15:50,560 --> 00:15:54,200 Speaker 1: by case. I h that's uh, what's the word anonym? Uh? 299 00:15:54,480 --> 00:15:57,480 Speaker 1: It drives itself? What do you You don't ask me 300 00:15:57,520 --> 00:15:59,080 Speaker 1: to spell it. I could barely say that's going to 301 00:15:59,200 --> 00:16:01,960 Speaker 1: ruin one of the best jobs in America. Well, yeah, 302 00:16:02,000 --> 00:16:04,280 Speaker 1: there'll be a guy driving another tractor next to it, 303 00:16:04,320 --> 00:16:07,040 Speaker 1: maybe planting the crop, and and that tractor will be 304 00:16:07,240 --> 00:16:09,120 Speaker 1: tearing up the ground next to it. So there'll be 305 00:16:09,120 --> 00:16:12,480 Speaker 1: someone around with a remote control, almost like flying a drone. 306 00:16:12,560 --> 00:16:17,800 Speaker 1: So technology has changed agricultural agriculture in a big way. 307 00:16:17,840 --> 00:16:20,080 Speaker 1: And so I'm a technology bolt when I do speeches. 308 00:16:20,600 --> 00:16:24,200 Speaker 1: I come from a stock trading background. Uh. But I 309 00:16:24,240 --> 00:16:27,760 Speaker 1: started trading Imani smps when they started on Globex. I 310 00:16:27,760 --> 00:16:29,840 Speaker 1: remember the first day I traded Emeny's the day they 311 00:16:29,840 --> 00:16:32,880 Speaker 1: open the think they traded eighteen thousand contracts. And I 312 00:16:32,920 --> 00:16:36,080 Speaker 1: had a Globe station at my office and a project day, 313 00:16:36,120 --> 00:16:38,600 Speaker 1: and so I was always big on technology. What it 314 00:16:38,680 --> 00:16:41,560 Speaker 1: hit me I went over to Germany and I saw 315 00:16:41,600 --> 00:16:45,600 Speaker 1: that the Boon contract was trading electronic, that London had 316 00:16:45,640 --> 00:16:47,480 Speaker 1: lost it. Joe, I don't even if you know, if 317 00:16:47,480 --> 00:16:49,520 Speaker 1: you're old enough to remember all this stuff. But the 318 00:16:49,520 --> 00:16:51,760 Speaker 1: Boon used to trade in pits in London, and then 319 00:16:51,840 --> 00:16:54,680 Speaker 1: it moved over to the u X Exchange. And uh, 320 00:16:54,920 --> 00:16:57,120 Speaker 1: when I realized there were no pits anymore, it made 321 00:16:57,120 --> 00:17:00,600 Speaker 1: me think when I went back to Chicago, when are 322 00:17:00,640 --> 00:17:02,800 Speaker 1: the pits going to go away in Chicago? And most 323 00:17:02,840 --> 00:17:04,520 Speaker 1: of them are gone now. And so I'm a big 324 00:17:04,560 --> 00:17:07,480 Speaker 1: technology bull and I like to get out there and 325 00:17:07,480 --> 00:17:10,240 Speaker 1: and and educate the farmer. What's funny about the American 326 00:17:10,280 --> 00:17:13,000 Speaker 1: farmer is if you ask them to see their iPhone 327 00:17:13,080 --> 00:17:16,399 Speaker 1: or whatever smart device they use, they have every app. 328 00:17:16,480 --> 00:17:18,760 Speaker 1: They can tell you how much it rained in every field. 329 00:17:19,119 --> 00:17:21,080 Speaker 1: They can tell you how much fertilizer they need. They 330 00:17:21,119 --> 00:17:24,879 Speaker 1: get text and emails to add more fertilizer. Too. Is 331 00:17:25,240 --> 00:17:27,600 Speaker 1: it's almost like a recipe to grow this perfect crop. 332 00:17:27,960 --> 00:17:33,200 Speaker 1: And so if you aren't improving through technology and better marketing, 333 00:17:33,560 --> 00:17:36,199 Speaker 1: your neighbor is and they're gonna pass you up. And 334 00:17:36,200 --> 00:17:38,720 Speaker 1: I'll tell you one other thing. And this should scare people. 335 00:17:39,160 --> 00:17:41,959 Speaker 1: Agriculture is not just an American thing. When I went 336 00:17:42,000 --> 00:17:45,640 Speaker 1: to the John Deeer factory in Waterloo, Iowa, the John 337 00:17:45,680 --> 00:17:49,000 Speaker 1: Deere tractors are going overseas. And so if you you know, 338 00:17:49,119 --> 00:17:52,439 Speaker 1: follow Howard Buffett, follow Warren Buffett Son Howard. He's a 339 00:17:52,440 --> 00:17:54,920 Speaker 1: farmer in central Illinois right next to one of my customers. 340 00:17:55,200 --> 00:17:57,359 Speaker 1: He's going all over the world showing people how to 341 00:17:57,400 --> 00:18:01,479 Speaker 1: grow crops. Technology and agger culture is a world market. 342 00:18:01,720 --> 00:18:04,040 Speaker 1: And although America is still a leader, if they don't 343 00:18:04,040 --> 00:18:06,520 Speaker 1: watch themselves, they're going to get passed up. Tommy, you 344 00:18:06,600 --> 00:18:09,760 Speaker 1: just reminded me that one of our coworkers, and actually 345 00:18:09,840 --> 00:18:14,000 Speaker 1: a previous off Lots guest, Lorcan rosh Kelly, has a 346 00:18:14,040 --> 00:18:17,000 Speaker 1: cow farm and he was telling us once he actually 347 00:18:17,000 --> 00:18:20,000 Speaker 1: has a smartphone app that I think tells him when 348 00:18:20,040 --> 00:18:23,760 Speaker 1: his cows are about to give birth. Uh So, technology 349 00:18:23,800 --> 00:18:27,040 Speaker 1: and in all types of agriculture right now. But I'm 350 00:18:27,080 --> 00:18:30,040 Speaker 1: just wondering when we start to think about technology. Uh 351 00:18:30,080 --> 00:18:31,800 Speaker 1: you know, when Joe and I talked about it every day, 352 00:18:32,000 --> 00:18:34,359 Speaker 1: we usually talk about it in the context of companies 353 00:18:34,400 --> 00:18:38,000 Speaker 1: like Apple or Amazon, and I'm wondering if a similar 354 00:18:38,080 --> 00:18:42,159 Speaker 1: dynamic is present in agriculture where you get these big 355 00:18:42,240 --> 00:18:46,879 Speaker 1: farming companies that essentially develop an edge because they have 356 00:18:47,040 --> 00:18:49,600 Speaker 1: lots of money to spend on tech and that makes 357 00:18:49,600 --> 00:18:51,960 Speaker 1: them more efficient, and then does that mean that they 358 00:18:52,000 --> 00:18:55,440 Speaker 1: go on to become big, big players in the commodities 359 00:18:55,520 --> 00:19:00,960 Speaker 1: trading market as well. I think you're correct the American 360 00:19:01,000 --> 00:19:04,840 Speaker 1: farmers getting bigger, not smaller. They're getting more efficient. It's 361 00:19:04,840 --> 00:19:08,960 Speaker 1: really hard to run any business without adequate capital. I've 362 00:19:09,000 --> 00:19:13,359 Speaker 1: met some incredibly large farmers, and if you're not getting 363 00:19:13,359 --> 00:19:16,560 Speaker 1: with it, you're going behind one thing. You touched on 364 00:19:17,240 --> 00:19:20,000 Speaker 1: something very important, and they want you. It's going to be. 365 00:19:20,040 --> 00:19:22,159 Speaker 1: What I talked about next year in my speaking season 366 00:19:22,720 --> 00:19:26,840 Speaker 1: is that Amazon recently bought Whole Foods, and Amazon might 367 00:19:27,040 --> 00:19:31,520 Speaker 1: single handedly be changing how we shop for food and 368 00:19:31,520 --> 00:19:35,160 Speaker 1: how agriculture is and what products we grow in America. 369 00:19:35,720 --> 00:19:40,480 Speaker 1: I think sometimes there's a pushback against non GMO or 370 00:19:40,560 --> 00:19:43,240 Speaker 1: this thing or that thing, and the American farmer has 371 00:19:43,280 --> 00:19:45,960 Speaker 1: to be listening to what the consumer wants. And Amazon 372 00:19:46,040 --> 00:19:49,040 Speaker 1: knows what the consumer wants because no one has more 373 00:19:49,119 --> 00:19:51,320 Speaker 1: data on what you like to purchase in Amazon. Would 374 00:19:51,320 --> 00:19:54,480 Speaker 1: you guys agree, No question. So watch out for Amazon 375 00:19:54,520 --> 00:19:57,600 Speaker 1: Whole Foods and how that changes agriculture the next five years, 376 00:19:57,640 --> 00:20:01,240 Speaker 1: ten years. The supermarket industry. There's a supermarket in my 377 00:20:01,320 --> 00:20:05,280 Speaker 1: hometown called Stracking Me Until family store for fifty sixty years. 378 00:20:05,280 --> 00:20:08,200 Speaker 1: They filed bankruptcy a week ago. You know, why is 379 00:20:08,240 --> 00:20:10,840 Speaker 1: that happening? What's going on? How could this family mom 380 00:20:10,840 --> 00:20:14,600 Speaker 1: and pop grocery store with change we filing bankruptcy. Things 381 00:20:14,600 --> 00:20:18,520 Speaker 1: are changing and agriculture is changing. But I no doubt 382 00:20:18,560 --> 00:20:22,000 Speaker 1: my mind, the single reason I'm up in South Dakota, Minnesota, 383 00:20:22,480 --> 00:20:25,840 Speaker 1: North Dakota is because technology changed and folks are able 384 00:20:25,840 --> 00:20:28,960 Speaker 1: to grow way more bushels in a shorter time. And 385 00:20:29,000 --> 00:20:31,800 Speaker 1: when that happens with your supply and demand, that makes 386 00:20:31,800 --> 00:20:35,119 Speaker 1: the markets go down. We've talked about how the market works, 387 00:20:35,200 --> 00:20:37,639 Speaker 1: We've talked about some of the big picture changes, the 388 00:20:37,720 --> 00:20:40,480 Speaker 1: role of technology. Now let's get into you know we're 389 00:20:40,480 --> 00:20:43,440 Speaker 1: talking about it in the beginning. This market has been 390 00:20:43,440 --> 00:20:47,560 Speaker 1: pretty volatile lately, if you like exciting markets grains or 391 00:20:47,600 --> 00:20:52,080 Speaker 1: where it's at now. Just weat also some pretty shocking 392 00:20:52,080 --> 00:20:56,200 Speaker 1: action and soybeans lately, which very quickly erased a big downturn. 393 00:20:56,640 --> 00:20:59,880 Speaker 1: What's the big picture of why we're seeing such exciting 394 00:21:00,040 --> 00:21:03,200 Speaker 1: swings right now? Is it all weather? Is it demand 395 00:21:03,280 --> 00:21:06,359 Speaker 1: from overseas? What are the factors? I'll take choice see 396 00:21:06,359 --> 00:21:10,919 Speaker 1: all the above. So China has an insatiable demand for 397 00:21:10,920 --> 00:21:13,639 Speaker 1: our soybeans. Every time the government tells you that we 398 00:21:13,680 --> 00:21:16,040 Speaker 1: have a lot of soybeans, and that would make traders 399 00:21:16,080 --> 00:21:18,320 Speaker 1: and speculators think the price is going to go down 400 00:21:18,680 --> 00:21:19,879 Speaker 1: all of a sudden. At the end of the year, 401 00:21:19,920 --> 00:21:24,160 Speaker 1: our ending stocks are lower. The story in wheat is uh, 402 00:21:24,320 --> 00:21:28,359 Speaker 1: it's more of a world market problems in Australia, Europe, America. 403 00:21:29,119 --> 00:21:32,719 Speaker 1: We had temperatures of degrees and thirty mile winds for 404 00:21:32,800 --> 00:21:35,240 Speaker 1: three days in South Dakota and North Dakota and it 405 00:21:35,359 --> 00:21:41,679 Speaker 1: absolutely stunted the wheat crop. What's interesting about commodities is 406 00:21:41,880 --> 00:21:44,679 Speaker 1: people kind of wait to buy them. So commodities have 407 00:21:44,720 --> 00:21:47,159 Speaker 1: been so cheap for so long that they just go 408 00:21:47,320 --> 00:21:49,959 Speaker 1: hand them out and they just buy them as they 409 00:21:49,960 --> 00:21:51,680 Speaker 1: need them. And then once they start to go up 410 00:21:52,040 --> 00:21:56,000 Speaker 1: and speculation starts, people start the panic. And I think 411 00:21:56,040 --> 00:21:57,920 Speaker 1: we've seen a little bit in commodities and maybe it 412 00:21:57,920 --> 00:21:59,880 Speaker 1: will straighten itself out. Maybe it was just a short 413 00:22:00,000 --> 00:22:02,240 Speaker 1: are and blip. But there was a point where I 414 00:22:02,680 --> 00:22:05,640 Speaker 1: didn't think I really knew how to trade commodities anymore. 415 00:22:05,880 --> 00:22:07,880 Speaker 1: And then after the last three months, I can say 416 00:22:07,960 --> 00:22:10,080 Speaker 1: I didn't forget how to trade. They just weren't busy. 417 00:22:10,200 --> 00:22:13,520 Speaker 1: This is the busiest we've been in years. Years and years, 418 00:22:13,560 --> 00:22:17,040 Speaker 1: and it's a wonderful market to trade. It's very dynamic. 419 00:22:17,080 --> 00:22:19,639 Speaker 1: There's a lot of people in there. Uh. One of 420 00:22:19,640 --> 00:22:22,640 Speaker 1: the things Tracy had asked before was, so you got 421 00:22:22,640 --> 00:22:26,080 Speaker 1: the farmer selling, who's buying? Well, look at Tyson chickens. 422 00:22:26,320 --> 00:22:28,480 Speaker 1: They need X amount of corn and meal every day, 423 00:22:28,760 --> 00:22:30,679 Speaker 1: and so anyone who's feeding an animal needs to be 424 00:22:30,680 --> 00:22:32,800 Speaker 1: buying corn and meal, and anyone who's growing the grain 425 00:22:32,880 --> 00:22:35,359 Speaker 1: needs to be selling it. And then the consumers are 426 00:22:35,400 --> 00:22:37,960 Speaker 1: there NonStop buying it, not only in the US but 427 00:22:38,040 --> 00:22:40,720 Speaker 1: all over the world. And so it's a very dynamic market. 428 00:22:41,160 --> 00:22:43,760 Speaker 1: It's probably a lost art. I have to say. I 429 00:22:43,800 --> 00:22:46,360 Speaker 1: don't know how many humans are left trading these markets. 430 00:22:46,600 --> 00:22:49,600 Speaker 1: I don't know how many tim gersafies are left trading 431 00:22:49,640 --> 00:22:52,160 Speaker 1: at seven o'clock at night, trading at six in the morning, 432 00:22:52,200 --> 00:22:54,879 Speaker 1: watching the weather come out at four thirty. I wish 433 00:22:54,880 --> 00:22:57,960 Speaker 1: I knew it's it's definitely changed and we've lost that 434 00:22:58,160 --> 00:23:00,639 Speaker 1: human element to the market, and I don't know that 435 00:23:00,680 --> 00:23:03,159 Speaker 1: we'll ever get it back. Yeah, Tracy, when I called 436 00:23:03,520 --> 00:23:06,440 Speaker 1: Tommy this morning to sort of lock down the details 437 00:23:06,440 --> 00:23:08,639 Speaker 1: for today's discussion, you know, I knew it was in 438 00:23:08,800 --> 00:23:11,120 Speaker 1: Midwest time zone. So I said, are you up. He's like, oh, yeah, 439 00:23:11,119 --> 00:23:13,280 Speaker 1: I've been up for a while trading the corn. So 440 00:23:13,760 --> 00:23:16,840 Speaker 1: I really I really enjoyed hearing that. You know, Tommy, 441 00:23:16,920 --> 00:23:19,040 Speaker 1: you kind of touched. I wanted on what I wanted 442 00:23:19,080 --> 00:23:21,760 Speaker 1: to ask you next, which is, you know, you mentioned speculation, 443 00:23:21,960 --> 00:23:25,680 Speaker 1: so I guess how much of the trading that we've seen, 444 00:23:25,800 --> 00:23:29,800 Speaker 1: for instance, in wheat, would come from speculation. And you 445 00:23:29,880 --> 00:23:34,120 Speaker 1: also mentioned fewer human traders, So I want to ask 446 00:23:34,119 --> 00:23:36,479 Speaker 1: as well, to what degree do you have sort of 447 00:23:36,680 --> 00:23:42,800 Speaker 1: technology driven momentum traders in the grains market? Nowadays? They're there, 448 00:23:42,840 --> 00:23:45,800 Speaker 1: and so high frequency trading firm might not have been 449 00:23:45,800 --> 00:23:49,320 Speaker 1: trading hard red spring wheat at the Minneapolis Exchange a 450 00:23:49,320 --> 00:23:51,480 Speaker 1: few months ago, but when they see it start to move, 451 00:23:52,080 --> 00:23:54,840 Speaker 1: they get the programmers together with the traders and then 452 00:23:54,920 --> 00:23:56,639 Speaker 1: they go at it and they start making a market 453 00:23:56,680 --> 00:23:59,280 Speaker 1: in it, and both the futures and options, and uh, 454 00:23:59,560 --> 00:24:03,159 Speaker 1: they're very disciplined it and it creates large moves and volatility, 455 00:24:03,160 --> 00:24:07,200 Speaker 1: and anyone who trades knows volatility as your is your friend. 456 00:24:07,320 --> 00:24:11,760 Speaker 1: But there's just just technologies change. Most of the traders 457 00:24:11,760 --> 00:24:14,240 Speaker 1: I know from the border trade either retired because they 458 00:24:14,240 --> 00:24:16,480 Speaker 1: made so much money, or they're driving for Uber now. 459 00:24:16,600 --> 00:24:19,479 Speaker 1: So I do not know of many humans who are 460 00:24:19,560 --> 00:24:22,640 Speaker 1: left trading markets. It's a it's a human working with 461 00:24:22,680 --> 00:24:26,080 Speaker 1: a programmer and a kid who's great in math and there, 462 00:24:26,920 --> 00:24:29,159 Speaker 1: and they have these programs running and they run all 463 00:24:29,280 --> 00:24:32,520 Speaker 1: night and all day, and they're very unemotional. Humans are emotional, 464 00:24:32,880 --> 00:24:35,520 Speaker 1: and that's what makes markets move, and we're missing that. 465 00:24:36,280 --> 00:24:40,639 Speaker 1: Which is interesting because sometimes grains have these many flash crashes, 466 00:24:40,920 --> 00:24:45,000 Speaker 1: just like the stock market did seven years ago. You wonder, 467 00:24:45,040 --> 00:24:46,640 Speaker 1: if there's so many people in line to buy, how 468 00:24:46,640 --> 00:24:49,119 Speaker 1: did we just break x amount of pennies? Or you 469 00:24:49,160 --> 00:24:51,320 Speaker 1: saw it happened in Amazon stock a few weeks ago. 470 00:24:51,600 --> 00:24:54,280 Speaker 1: How does a company like Amazon break ten a few 471 00:24:54,280 --> 00:24:57,400 Speaker 1: minutes and you're seeing it markets all over the world. 472 00:24:57,520 --> 00:25:00,240 Speaker 1: So Tommy kind of thinks in some ways that markets 473 00:25:00,240 --> 00:25:02,480 Speaker 1: aren't as liquid as you think when they get a 474 00:25:02,480 --> 00:25:04,920 Speaker 1: little nuts. When it's a nice, quiet day, there's plenty 475 00:25:04,960 --> 00:25:07,240 Speaker 1: of bids and offers. But when the stuff hits the 476 00:25:07,280 --> 00:25:09,760 Speaker 1: fan where all the people left to trade, that's why 477 00:25:09,800 --> 00:25:12,840 Speaker 1: all the bids and offers disappear. It's a real problem. 478 00:25:12,880 --> 00:25:14,399 Speaker 1: It's a real problem in America. I don't know how 479 00:25:14,400 --> 00:25:16,680 Speaker 1: we straighten it out, because I do think we're the 480 00:25:16,680 --> 00:25:20,040 Speaker 1: the core of all trading in the world. But you 481 00:25:20,080 --> 00:25:21,639 Speaker 1: want to do what's right by the customer, and you 482 00:25:21,640 --> 00:25:24,199 Speaker 1: want to provide that deep liquid market. To sort of 483 00:25:24,240 --> 00:25:27,399 Speaker 1: wrap things up here, one of the things that I 484 00:25:27,480 --> 00:25:32,880 Speaker 1: really like about this conversation is not only our other 485 00:25:33,000 --> 00:25:36,800 Speaker 1: markets have that hasn't really not been very much volatility, 486 00:25:36,840 --> 00:25:39,399 Speaker 1: but it feels like they're all sort of the same story. 487 00:25:39,440 --> 00:25:42,920 Speaker 1: It feels like there's only one market. So whether it's gold, 488 00:25:43,240 --> 00:25:48,439 Speaker 1: whether it's oil, whether it's US treasuries, German boons, the 489 00:25:48,560 --> 00:25:53,840 Speaker 1: Japanese yen, U s tex s docs, everything feels hyper correlated. 490 00:25:53,960 --> 00:25:58,320 Speaker 1: Everything is macro, everything is the FED. When talking to 491 00:25:58,359 --> 00:26:02,840 Speaker 1: you about brains, it really feels like a different story. 492 00:26:02,960 --> 00:26:05,600 Speaker 1: It really feels like a world where it's not all 493 00:26:05,640 --> 00:26:08,040 Speaker 1: about the FED. It's not all about what a drog 494 00:26:08,080 --> 00:26:12,640 Speaker 1: you say today, and it just uh, it's very refreshing. Well, 495 00:26:13,320 --> 00:26:15,320 Speaker 1: it's fun and I wish more people would get involved, 496 00:26:15,320 --> 00:26:18,120 Speaker 1: and if anyone needs education, I'd always put a hand 497 00:26:18,119 --> 00:26:22,239 Speaker 1: out to educate. One thing, Joe, is that when the 498 00:26:22,280 --> 00:26:25,240 Speaker 1: FED says something, or when the Treasury releases bonds because 499 00:26:25,240 --> 00:26:27,280 Speaker 1: I grew up in the thirty year treasury pit at 500 00:26:27,320 --> 00:26:29,480 Speaker 1: the Chicago Border Trade one of the biggest, baddest pits 501 00:26:29,520 --> 00:26:31,960 Speaker 1: in the world. But when a farmer sells grain, there's 502 00:26:32,000 --> 00:26:35,800 Speaker 1: over twenty elevators they sell grain, so they don't get 503 00:26:35,800 --> 00:26:37,920 Speaker 1: to sell grain at the border trade price. You really 504 00:26:37,920 --> 00:26:40,840 Speaker 1: sell grain in your backyard, and that's more important than 505 00:26:40,880 --> 00:26:44,200 Speaker 1: people realize. So there's no central bank, there's just local 506 00:26:44,240 --> 00:26:47,960 Speaker 1: grain elevators and little towns conducting business. And that's that's 507 00:26:48,000 --> 00:26:50,960 Speaker 1: what's amazing about the grain industry. Well, I think that 508 00:26:51,160 --> 00:26:54,360 Speaker 1: is a great place to leave it. And your offer 509 00:26:54,480 --> 00:26:57,479 Speaker 1: to educate people about this space, I hope a lot 510 00:26:57,560 --> 00:27:00,879 Speaker 1: of our listeners will take you up. Me Grossafi of 511 00:27:00,920 --> 00:27:03,520 Speaker 1: advanced Trading, thank you very much. I learned a ton 512 00:27:03,600 --> 00:27:18,120 Speaker 1: in this conversation and Tracy my pleasure. So, Tracy, did 513 00:27:18,160 --> 00:27:21,359 Speaker 1: that deliver on my promise that there is an exciting 514 00:27:21,480 --> 00:27:25,520 Speaker 1: area of the markets that's not boring. Yeah, it absolutely 515 00:27:25,520 --> 00:27:27,760 Speaker 1: did it. Also, it kind of warms my heart to 516 00:27:27,960 --> 00:27:32,560 Speaker 1: think about trading in an actual physical commodity and one 517 00:27:32,600 --> 00:27:38,280 Speaker 1: that's so I guess emotionally attached to our daily lives, 518 00:27:38,359 --> 00:27:40,800 Speaker 1: right like we all sit down and eat cereal or 519 00:27:40,840 --> 00:27:43,320 Speaker 1: bread on a daily basis. So it's fun to think 520 00:27:43,359 --> 00:27:46,359 Speaker 1: about the trading that goes on around those commodities. Yeah, 521 00:27:46,359 --> 00:27:49,320 Speaker 1: there's just so much going on here in terms of 522 00:27:49,359 --> 00:27:53,160 Speaker 1: the intersecting stories, and it just feels, you know, if 523 00:27:53,160 --> 00:27:57,000 Speaker 1: you think about like buying a you know, a tenure 524 00:27:57,119 --> 00:28:00,280 Speaker 1: treasury or future or even a share of stock, just 525 00:28:00,320 --> 00:28:02,959 Speaker 1: like you look at a spreadsheet and you plug in 526 00:28:03,080 --> 00:28:06,280 Speaker 1: a series of numbers. So the idea that there is 527 00:28:06,320 --> 00:28:09,679 Speaker 1: still this market where Tommy is still traveling from his 528 00:28:09,720 --> 00:28:14,200 Speaker 1: home in Indiana to his apartment in North Dakota explaining 529 00:28:14,240 --> 00:28:18,040 Speaker 1: to farmers how the market works. They're getting their bids 530 00:28:18,119 --> 00:28:22,800 Speaker 1: from the local grain elevator. The grain elevator is obviously 531 00:28:22,840 --> 00:28:25,720 Speaker 1: reacting to the demand from people who need to feed 532 00:28:25,760 --> 00:28:28,840 Speaker 1: cows or perhaps not not so dis in future, the 533 00:28:28,920 --> 00:28:32,560 Speaker 1: demands from Amazon and Whole Food for what kind of 534 00:28:32,560 --> 00:28:35,919 Speaker 1: food they want to stock for obvious reasons. There's a 535 00:28:35,960 --> 00:28:40,160 Speaker 1: certain refreshing reality to it. Yeah, and the Amazon angle 536 00:28:40,280 --> 00:28:43,200 Speaker 1: and the technology angle is really interesting too, because I 537 00:28:43,200 --> 00:28:45,880 Speaker 1: think that's where it all starts to feed into the 538 00:28:45,880 --> 00:28:49,160 Speaker 1: global economy in the sense that you know, when we 539 00:28:49,240 --> 00:28:52,440 Speaker 1: think about inflation and the fact that we haven't had 540 00:28:52,840 --> 00:28:56,240 Speaker 1: much of it um for the past almost a decade. Now, 541 00:28:56,760 --> 00:29:00,440 Speaker 1: A lot of people tend to think about consumer goods 542 00:29:00,560 --> 00:29:03,120 Speaker 1: and the idea that those are getting cheaper because technology 543 00:29:03,200 --> 00:29:06,920 Speaker 1: is developing. Not many people, I don't think it just yet. 544 00:29:07,000 --> 00:29:10,760 Speaker 1: Think that there's a new tractor model out and that's 545 00:29:10,840 --> 00:29:13,720 Speaker 1: making the growing of crops much more efficient, and so 546 00:29:13,760 --> 00:29:17,240 Speaker 1: the price of flour is falling, and that's feeding into 547 00:29:17,320 --> 00:29:21,760 Speaker 1: prices as well. So that's another important angle here. I think, yeah, 548 00:29:21,960 --> 00:29:25,120 Speaker 1: so much, so much good stuff. You know this last 549 00:29:25,160 --> 00:29:28,680 Speaker 1: few weeks if it's as super exciting from the grains market, 550 00:29:28,960 --> 00:29:31,400 Speaker 1: But even when things quiet down, I think I'm gonna 551 00:29:31,400 --> 00:29:33,400 Speaker 1: start paying attention in this world more because it just 552 00:29:33,440 --> 00:29:36,240 Speaker 1: feels that it just feels different than everything else. You 553 00:29:36,320 --> 00:29:38,840 Speaker 1: need to buy yourself a little farm and do some 554 00:29:39,360 --> 00:29:42,920 Speaker 1: some corn trading, you know what. Actually, when I retire, 555 00:29:43,280 --> 00:29:45,960 Speaker 1: what I want my part time retirement job. I want 556 00:29:45,960 --> 00:29:48,400 Speaker 1: to get like a job like at a radio station 557 00:29:48,480 --> 00:29:52,320 Speaker 1: in Iowa doing the local grain report. I think retirement jobs. 558 00:29:53,080 --> 00:29:55,840 Speaker 1: I think you'd be good at it. Joe. Thank you, Tracy. 559 00:29:56,320 --> 00:29:59,120 Speaker 1: This has been another episode of the Odd Lots podcast. 560 00:29:59,160 --> 00:30:01,560 Speaker 1: I'm Joe Wise, though. You can follow me on Twitter 561 00:30:01,720 --> 00:30:05,040 Speaker 1: at the Stalwart and I'm Tracy Alloway. I'm on Twitter 562 00:30:05,160 --> 00:30:08,520 Speaker 1: at Tracy Alloway. And you can find Tommy on Twitter 563 00:30:09,000 --> 00:30:12,480 Speaker 1: at Indiana Grainco. Remember to reach out to him and 564 00:30:12,520 --> 00:30:15,920 Speaker 1: he'll teach you about the market. And our producer, Sarah 565 00:30:15,960 --> 00:30:20,120 Speaker 1: Patterson follow her Sarah patt with two Teas. Thanks for listening.