WEBVTT - Why Wheat is the World's Most Exciting Market Right Now 0:00:09.160 --> 0:00:13.360 Hello, and welcome to another episode of the Odd Lots Podcast. 0:00:13.480 --> 0:00:17.239 I'm Joe Wisenthal and I'm Tracy Alloway. You know, Tracy, 0:00:17.320 --> 0:00:20.319 I think we tooked a few weeks ago, on maybe 0:00:20.320 --> 0:00:22.720 a month ago. I lose track of the time about 0:00:22.800 --> 0:00:26.200 how there wasn't very much volatility in markets these days 0:00:26.239 --> 0:00:28.680 and it was kind of a source of frustration for 0:00:29.080 --> 0:00:32.800 markets journalists. Yeah, we talked about that a lot, I feel, yeah, 0:00:33.040 --> 0:00:35.200 you know, we're always talking about it internally. I forget 0:00:35.200 --> 0:00:38.240 which episode it brought it up on. Maybe there's a 0:00:38.280 --> 0:00:40.440 little bit of market volatility picked up, but it's still 0:00:40.520 --> 0:00:42.680 kind of a big issue that, you know, where is 0:00:42.720 --> 0:00:46.239 the volatility? It's very boring. Are you going to tell 0:00:46.280 --> 0:00:50.159 me that you've actually found some volatility in the market. Yes, Tracy, 0:00:50.440 --> 0:00:53.440 I have some great news for you. I have found 0:00:53.640 --> 0:00:57.240 the volatility in the market. I have found a corner 0:00:57.360 --> 0:01:00.520 of the market that is not boring at all, that 0:01:00.720 --> 0:01:03.800 is thrilling every day. And not only that, it's not 0:01:03.880 --> 0:01:06.560 even that obscure, it's actually one of the it's a 0:01:06.600 --> 0:01:09.760 crucial market for the entire Really, part of me doesn't 0:01:09.840 --> 0:01:12.360 want to ask because I think it will be really obscure, 0:01:12.440 --> 0:01:15.640 But Okay, what is it. No, it's not obscure. I'm 0:01:15.680 --> 0:01:19.520 not gonna like site like, you know, the spread between 0:01:19.959 --> 0:01:24.880 Norwegian frozen salmon and Norwegian fresh salmon or anything anything 0:01:24.920 --> 0:01:28.000 like this. Uh No, the answer is the grains market. 0:01:29.400 --> 0:01:32.440 All right, you said it wasn't obscure. Well, come on, 0:01:32.600 --> 0:01:35.880 grains are not obscure. I mean most people bread all 0:01:35.880 --> 0:01:40.600 the time, and cereal and uh you know, soft agricultural 0:01:40.640 --> 0:01:44.039 commodities are. Okay, I'm pretty important to most people. I 0:01:44.080 --> 0:01:46.280 know they're a big part of life. But I guess 0:01:46.319 --> 0:01:49.120 when people think about the market, they don't necessarily think 0:01:49.160 --> 0:01:52.680 about the commodities market, even though I suppose in fairness 0:01:52.760 --> 0:01:56.640 a lot of the current financial instruments that we have 0:01:56.920 --> 0:02:01.480 in markets actually developed from boies, right, like futures, I 0:02:01.480 --> 0:02:06.120 think we're originally commodities oriented. Every time you read about 0:02:06.120 --> 0:02:09.880 the history of futures markets, it starts with some made 0:02:09.960 --> 0:02:14.360 up story, some some fantasy story about the farmer plants 0:02:14.480 --> 0:02:16.560 the corn and wants the lock of the price and 0:02:16.680 --> 0:02:19.679 sells it to the speculator. You know, that's like, that's 0:02:19.720 --> 0:02:25.280 the classic description of how commodity futures work. And guess 0:02:25.280 --> 0:02:27.840 what that's exactly what we're gonna be talking about today, 0:02:27.919 --> 0:02:32.520 because the action in grains lately, particularly in wheat, but 0:02:32.600 --> 0:02:37.720 also sort soybeans and corn, has been very exciting and volatile, 0:02:37.800 --> 0:02:40.320 and if you like charts that go up and down 0:02:40.440 --> 0:02:44.079 very fast, you should be paying attention to grains. All right. Well, 0:02:44.120 --> 0:02:47.480 I've always had a soft spot for commodities, mostly because 0:02:47.520 --> 0:02:52.119 I'm amused by the notion of accidentally taking physical delivery 0:02:52.280 --> 0:02:55.520 of like a bushel of corn or something. But I'm 0:02:55.560 --> 0:02:57.880 looking forward to this episode because, as you say, we 0:02:58.000 --> 0:03:01.440 need a little bit of excitement in markets now exactly. 0:03:01.600 --> 0:03:04.600 And so today on the Outlaws podcast, we're going to 0:03:04.680 --> 0:03:08.679 be talking to Tommy Grisafi. He is a risk manager 0:03:08.880 --> 0:03:12.679 at Advanced Trading, which is a firm that helps players 0:03:12.800 --> 0:03:18.120 in the agricultural space farmers, grain elevator operators, hedge and 0:03:18.240 --> 0:03:21.680 manage their risks. So right, you know, basically right in 0:03:21.720 --> 0:03:25.040 this whole story of why the futures market exists, and 0:03:25.120 --> 0:03:38.920 in addition to that, he trades these futures himself. Tommy, 0:03:38.960 --> 0:03:42.000 thank you very much for joining us. Thank you, thank you, Joe. 0:03:42.000 --> 0:03:44.360 It's a pleasure to be here, and what exciting time 0:03:44.400 --> 0:03:48.760 in the agricultural space. I I was listening before, and yes, 0:03:48.800 --> 0:03:51.520 it's very boring time in commodities. It's been a rough 0:03:51.560 --> 0:03:54.640 go for commodity traders the last few years. Someone who 0:03:54.680 --> 0:03:57.320 trades gold or crude oil, it's just it's just not 0:03:57.480 --> 0:03:59.280 sexy like it used to be when I first met 0:03:59.320 --> 0:04:01.839 you on Twitter in O eight oh nine, and yeah, 0:04:01.880 --> 0:04:04.880 those were what I miss and I say, Corn's limit down. 0:04:05.000 --> 0:04:08.720 And you know, think about when the Fukushima accident happened 0:04:08.760 --> 0:04:11.880 in Japan, how crazy we were, and it's it's just changed, 0:04:12.040 --> 0:04:14.280 and there's a lot of reasons why it's changed. But 0:04:14.600 --> 0:04:16.800 you know, let's move forward. You know, you can't look back. 0:04:16.800 --> 0:04:18.840 All we have is where we are today, right right, 0:04:18.920 --> 0:04:21.000 and what we have today. You know, as you said 0:04:21.000 --> 0:04:23.240 that a lot of the markets aren't very sexy right 0:04:23.320 --> 0:04:27.400 now from a volatility perspective. But one market that is 0:04:27.520 --> 0:04:30.160 very sexy is the wheat market and that's been, uh, 0:04:30.279 --> 0:04:33.280 that's been going absolutely wildly. Yeah, for those of us 0:04:33.320 --> 0:04:36.760 who haven't For those of us who haven't been following 0:04:37.160 --> 0:04:39.840 the wheat market as much as we should, Tommy, can 0:04:39.839 --> 0:04:41.719 you give us a sort of high level overview of 0:04:41.760 --> 0:04:46.000 what's been happening. Sure, there's three wheat futures. There's one 0:04:46.040 --> 0:04:49.560 that Minneapolis Grain Exchange sets up in Minneapolis. There's the 0:04:49.640 --> 0:04:52.720 Kansas City Border Trade which was bought by the Semi Group, 0:04:52.720 --> 0:04:54.880 but it was in Kansas City. And then there's the 0:04:54.920 --> 0:04:58.040 Border Trade Wheat contract, which probably has the deepest, most 0:04:58.120 --> 0:05:02.240 liquid e but wheat snapped wheat. So I have a 0:05:02.279 --> 0:05:05.680 customer who grows wheat in North Dakota, it goes to 0:05:05.760 --> 0:05:08.440 North Dakota mill, gets put on a truck, and that 0:05:08.480 --> 0:05:10.480 truck brings that flour all the way to New York. 0:05:10.839 --> 0:05:12.880 And that's what that wheat up there is what's used 0:05:12.920 --> 0:05:14.960 in your pizza dough and your bagels that New York's 0:05:15.000 --> 0:05:18.600 famous for. And I'm sure we could all relate. It's 0:05:18.640 --> 0:05:21.960 also the high gluten wheat. So if you're into the 0:05:21.960 --> 0:05:24.719 gluten free, you're probably not eating much of that. So 0:05:25.680 --> 0:05:28.000 then you have your casey wheat that's your traditional breads 0:05:28.000 --> 0:05:30.080 and whatnot. And then you have your board of trade wheat, 0:05:30.279 --> 0:05:32.800 which would be like a cracker. And so wheat's not wheat. 0:05:33.360 --> 0:05:36.440 It's graded by proteins. And you'll you'll read tweets or 0:05:36.440 --> 0:05:39.280 you'll hear information they're bidding up protein and you may 0:05:39.320 --> 0:05:42.000 not have understood what that meant, but now you will. Oh. 0:05:42.080 --> 0:05:44.919 I always thought protein referred to the animal like a 0:05:45.000 --> 0:05:48.560 hog or cow. But when people say they're bidding a protein, 0:05:49.120 --> 0:05:52.160 it means that the wheat with the higher protein content 0:05:52.279 --> 0:05:56.120 that stuff up in Minneapolis is selling for premium. Exactly, 0:05:56.160 --> 0:05:59.560 it can trade for dollars over so currently, Uh, you know, 0:05:59.720 --> 0:06:01.960 weat a couple of dollars over the other weeks, and 0:06:02.040 --> 0:06:05.360 so there's people who spread all three weeks against each other. 0:06:05.400 --> 0:06:07.760 You could buy Minneapolis, sell the board. You could buy Many, 0:06:07.839 --> 0:06:10.320 sell Kansas City. You could sell many and buy the 0:06:10.360 --> 0:06:13.440 other two. And lots of combinations, lots of spreading going on, 0:06:13.600 --> 0:06:18.120 lots of lots of fun, and unfortunately it's it's been 0:06:18.200 --> 0:06:21.839 slow for quite a while. And that's how I ended 0:06:21.920 --> 0:06:24.880 up with this position that advanced trading was they said, 0:06:25.279 --> 0:06:27.480 I love the grains, I love the commodities. How can 0:06:27.520 --> 0:06:29.479 I go help people? I went down to the border 0:06:29.520 --> 0:06:34.120 trade on a high school field trip, and uh, if you, 0:06:34.279 --> 0:06:36.280 if you eat three meals a day, you're affected by 0:06:36.279 --> 0:06:38.960 agg How can I go educate the American farmer on 0:06:39.000 --> 0:06:41.480 how to better use these products? That's how you ended 0:06:41.520 --> 0:06:45.120 up in North Dakota. I realized, and this is important 0:06:45.120 --> 0:06:48.200 where you could use it in other segments of Bloomberg 0:06:48.200 --> 0:06:51.920 and Finances. That technology has changed. So when you talk 0:06:51.920 --> 0:06:54.880 about a stock like Montsano, Tommy, how are they how 0:06:54.880 --> 0:06:56.640 do you have a customer who's two miles from the 0:06:56.640 --> 0:07:00.400 North Dakota board North Canada border growing wheat and corn 0:07:00.440 --> 0:07:03.080 and beans. And so when these big crops come along 0:07:03.120 --> 0:07:05.680 and everyone's like where they come from, it's really due 0:07:05.680 --> 0:07:09.120 that to the recent technology and modern changes of the seed. 0:07:09.720 --> 0:07:13.840 And uh, it's just amazing, just absolutely amazing. I just 0:07:13.840 --> 0:07:16.600 want to say, Tracy, I've already learned so much on 0:07:16.680 --> 0:07:19.600 this episode if with I think about two minutes in, 0:07:19.920 --> 0:07:23.160 so this is great. I want to let's let's sort 0:07:23.160 --> 0:07:26.360 of break things down. So we started on a little 0:07:26.360 --> 0:07:29.160 bit about all the volatility lately. Let's back up for 0:07:29.200 --> 0:07:31.800 a second and then return to that later. You're a 0:07:31.920 --> 0:07:34.880 risk manager at Advanced Trading. You talked about how you 0:07:35.240 --> 0:07:38.800 go up to the Dakota's help farmers and stuff. That 0:07:39.000 --> 0:07:42.119 sounds like what I was talking about. That textbook story 0:07:42.120 --> 0:07:45.440 that they always tell about how the futures market serves farmers. 0:07:45.920 --> 0:07:48.560 Is that right? Tell us about what you do in 0:07:48.560 --> 0:07:52.480 that capacity, you know, Joe, you couldn't be more more 0:07:52.520 --> 0:07:54.800 on the money. And so the border trade in the 0:07:54.880 --> 0:07:58.760 Semi group and the Minneapolis Grain Exchange. The Minneapolis Grain 0:07:58.800 --> 0:08:01.880 Exchange was actually formed by members of the Cargill family. 0:08:02.160 --> 0:08:03.800 So you want to talk about old money, there you 0:08:03.840 --> 0:08:06.480 have it. I could send you a little tidbit, you know, 0:08:06.600 --> 0:08:10.160 for you to read. So the old days, a farmer 0:08:10.200 --> 0:08:12.320 would see the prices were higher, and they would put 0:08:12.360 --> 0:08:14.320 their wheat on a horse and buggy and bring it 0:08:14.360 --> 0:08:16.520 to Minneapolis, and by the time they got there, the 0:08:16.560 --> 0:08:20.200 market would collapse. They said, this just isn't right. They said, 0:08:20.400 --> 0:08:22.720 I wish we had something to determine the price of 0:08:22.800 --> 0:08:24.760 what it was in the future. And that's how futures 0:08:24.760 --> 0:08:29.520 market started in Chicago with corn, wheat and beans and butter. 0:08:29.920 --> 0:08:31.920 And you read, you know, those are the classic Jesse 0:08:32.080 --> 0:08:35.079 Livermore stories. When you read Reminiscence of a Stock Operator, 0:08:35.360 --> 0:08:38.040 anyone listening, you know, buy it on audio taper. Read 0:08:38.080 --> 0:08:40.360 the book. If you haven't, if you're involved in commodities, 0:08:40.360 --> 0:08:42.360 there's no way you haven't read that book. And it's 0:08:42.360 --> 0:08:46.800 the old school commodity trading. And uh, the futures markets 0:08:47.600 --> 0:08:50.760 are very They were very influential to the modern day 0:08:50.760 --> 0:08:54.280 stock market and very influential to the options market because 0:08:54.320 --> 0:08:57.600 they started trading options on futures before they started trading 0:08:57.640 --> 0:09:00.080 options on stocks, and that's how the Chicago Board of 0:09:00.120 --> 0:09:03.440 Options Exchange was started. But nonetheless, going to you original question, 0:09:03.559 --> 0:09:06.559 So I'm up in North Dakota where technology has changed. 0:09:06.600 --> 0:09:10.079 They have beautiful, uh, fertile dirt in the Red River Valley, 0:09:10.080 --> 0:09:12.480 which anyone who is snapped familiar with. There there's a 0:09:12.520 --> 0:09:15.560 red there's a river called the Red River. It flows north. 0:09:15.840 --> 0:09:17.520 It's one of only two rivers I believe in the 0:09:17.559 --> 0:09:20.000 world to flow from south to north. Then it goes 0:09:20.080 --> 0:09:22.400 up to Winnipeg. And so when you're in North Dakota 0:09:22.440 --> 0:09:24.480 and it rains, your water actually goes up to Canada 0:09:24.480 --> 0:09:26.720 if you're along the Red River. But this soil along 0:09:26.760 --> 0:09:30.080 the Red River Valley is so fertile. And technology changed 0:09:30.120 --> 0:09:32.319 over the last twenty years, and so did the climate. 0:09:32.360 --> 0:09:35.160 It started raining more up in the Dakotas. Not this year, 0:09:35.400 --> 0:09:37.840 but just in general it started raining more. And so 0:09:37.920 --> 0:09:41.640 you have this beautiful fertile soil, the seed that in 0:09:41.679 --> 0:09:44.560 the old days, Joe and Tracy you'd plan a corn 0:09:44.600 --> 0:09:46.640 seed and you needed about a hundred days for it 0:09:46.679 --> 0:09:49.760 to mature. They can have they have corn seed. Now 0:09:49.760 --> 0:09:51.679 that's seventy day corn seeds. So you plan it in 0:09:51.720 --> 0:09:54.280 the ground, seventy days later, the plants mature and you're 0:09:54.280 --> 0:09:57.600 harvesting it. So a lot's change in technology. So the 0:09:57.640 --> 0:10:00.559 folks up and from the Chicago border tre to Fargo, 0:10:00.600 --> 0:10:03.640 North Dakota seven and fifty miles, and those folks up 0:10:03.640 --> 0:10:06.760 there couldn't feel more removed from the price action at 0:10:06.760 --> 0:10:10.720 the Border Trade, the Semi Group and the Minneapolis Screen Exchange. 0:10:10.720 --> 0:10:12.360 And so I'm actually up there. I have a place 0:10:12.440 --> 0:10:15.880 up there now in office and a apartment, and I'm 0:10:16.160 --> 0:10:19.040 they're educating people like the old fashioned brokers used to 0:10:19.080 --> 0:10:22.080 do in the sixties and seventies and eighties and say, hey, 0:10:22.120 --> 0:10:24.559 this is a future. But what's neat is with these 0:10:24.600 --> 0:10:26.599 options they could actually manage your risk. And I'm not 0:10:26.600 --> 0:10:28.840 going to teach you guys anything about options. I know 0:10:28.920 --> 0:10:31.040 you know a lot about it. But the farmers felt 0:10:31.120 --> 0:10:35.040 removed from the exchange. But as you know, futures are 0:10:35.440 --> 0:10:38.800 electronic now, so there's no difference if I'm sitting in 0:10:38.840 --> 0:10:41.880 my home in Valparaiso, Indiana, or my office at the 0:10:41.880 --> 0:10:44.440 Border Trade or my office in North Dakota. A matter 0:10:44.440 --> 0:10:45.960 of fact, no one even knows where I am. I 0:10:46.000 --> 0:10:48.319 have on the big fancy computers with eight screens and 0:10:48.760 --> 0:10:51.680 the Cisco voice over IP phone. No one knows where 0:10:51.679 --> 0:10:54.559 you are. And so I'm up there educating people, showing 0:10:54.600 --> 0:10:56.360 them how to manage risks. Say, hey, I don't know 0:10:56.400 --> 0:10:58.559 why wheats going up a dollar a day, But did 0:10:58.559 --> 0:11:00.480 you know you could set the floor with a adoption? 0:11:00.840 --> 0:11:04.760 And so there's an education process no different than people 0:11:04.800 --> 0:11:08.000 who had to learn, you know, the stock market education 0:11:08.040 --> 0:11:11.199 with these options the last twenty years. Wait, temmy, I'm 0:11:11.200 --> 0:11:14.240 still thinking about you know, the classic story of the 0:11:14.280 --> 0:11:17.640 farmer who wants to kind of ensure his crop output. 0:11:17.760 --> 0:11:20.800 So when you come up with the futures contract for that, 0:11:21.280 --> 0:11:25.440 how do you get two sides of the trade. Like, 0:11:25.679 --> 0:11:28.599 surely all the farmers back then we're looking at the 0:11:28.640 --> 0:11:31.160 same information and they were all thinking, well, you know, 0:11:31.600 --> 0:11:33.800 there might be a drought next year, and so I 0:11:33.840 --> 0:11:36.960 want the following protection. Who's taking the other side of 0:11:37.000 --> 0:11:40.120 that trade? And what are they looking at that the 0:11:40.240 --> 0:11:43.280 farmers aren't sure? That's a great question. Are you talking 0:11:43.320 --> 0:11:46.840 about years ago or modern day trading now? Or well, 0:11:46.880 --> 0:11:48.920 I guess I'm curious about both, Like what was it 0:11:48.960 --> 0:11:53.160 like years ago and what's it like now? Well, it's 0:11:53.360 --> 0:11:56.679 much more fast paced now very hard with this electronic 0:11:56.760 --> 0:12:00.120 markets and high frequency trading. One thing the farmers missing 0:12:00.200 --> 0:12:02.480 is they see the market go up, and they always 0:12:02.480 --> 0:12:04.880 think they'll have time to sell it. The second thing 0:12:05.000 --> 0:12:07.959 is is the whole world super focused on the stock market? 0:12:08.000 --> 0:12:10.720 Because what the stock market do the recent a few weeks, 0:12:10.800 --> 0:12:12.760 or what's it do every day? When I watched Bloomberg, 0:12:13.040 --> 0:12:16.679 Dow Jones New highs, it just it's a NonStop machine. 0:12:16.720 --> 0:12:19.520 Maybe someday it'll go down, and maybe it'll go down hard, 0:12:19.559 --> 0:12:21.840 But today then every other day it seems like the 0:12:21.840 --> 0:12:26.000 headlines are Dow Jones New High. Commodity markets are different. Again, 0:12:26.080 --> 0:12:28.640 anyone who's eating three times a day is affected by egg. 0:12:28.880 --> 0:12:31.800 But America is not set up. They have high egg prices. 0:12:32.120 --> 0:12:34.040 And if you don't believe me, look what happened when 0:12:34.040 --> 0:12:36.439 corn went to eight dollars. It about put the dairy 0:12:36.480 --> 0:12:39.280 industry out of business, It about put the hog industry, 0:12:39.320 --> 0:12:41.920 the cattle industry, and and so America is set up 0:12:41.960 --> 0:12:45.080 to run on affordable food. Matter of fact, when you 0:12:45.080 --> 0:12:47.800 look at the farm bills, it's called the Affordable Food Act. 0:12:47.880 --> 0:12:50.640 So to your question, things move a lot different now. 0:12:50.720 --> 0:12:53.760 Fifty years ago they didn't have options. So as far 0:12:53.800 --> 0:12:56.280 as a bushel corn being four dollars and you being 0:12:56.320 --> 0:12:58.760 able to spend twenty cents on a corn, put that 0:12:58.800 --> 0:13:02.280 didn't exist if years ago. Now for twenty cents one 0:13:02.280 --> 0:13:05.040 thousand dollars, you can set that floor. You don't know 0:13:05.080 --> 0:13:08.000 how many bushels you're producing, but you can set that floor, 0:13:08.080 --> 0:13:11.360 and you have something an insurance policy from four to zero. 0:13:11.720 --> 0:13:14.280 And in the old days, people were selling futures and 0:13:14.320 --> 0:13:16.840 that's where the big nasty story started about did you 0:13:16.840 --> 0:13:18.920 hear about so and so he got caught in the 0:13:18.960 --> 0:13:21.800 futures market, and so that's where the big margin calls 0:13:21.840 --> 0:13:24.880 come from, and all the other legendary stories that we 0:13:24.960 --> 0:13:30.559 hear about. I think it's really interesting you mentioning technology, 0:13:30.600 --> 0:13:33.679 and I'm curious about how it changes the market in 0:13:33.720 --> 0:13:36.480 a couple of ways. So, I mean, I don't think 0:13:36.480 --> 0:13:40.000 people often think about that grands are sort of a 0:13:40.000 --> 0:13:43.960 product of technology, the idea that yields improve over time, 0:13:44.400 --> 0:13:48.040 the idea that, as you said, we can grow corn 0:13:48.240 --> 0:13:51.400 from seed to completion in a shorter period of time. 0:13:51.880 --> 0:13:54.240 That second aspect, the idea of being able to grow 0:13:54.280 --> 0:13:58.040 a crop more quickly, does that mean that supply becomes 0:13:58.120 --> 0:14:01.319 more sensitive to prices? In other words, we see if 0:14:01.320 --> 0:14:05.120 we see a big spike and say corn and soybean 0:14:05.200 --> 0:14:09.200 prices or big drop, that farmers can switch their crop 0:14:09.280 --> 0:14:12.280 to respond to those price signals faster than they could 0:14:12.280 --> 0:14:14.800 have in the old days when the lead time was 0:14:14.920 --> 0:14:20.800 much longer. Absolutely, so, the seed companies are very accommodating that. 0:14:21.000 --> 0:14:23.760 The dot let's talk about that real quick. There's only 0:14:23.800 --> 0:14:26.240 a couple of seed companies left. I mean down Do 0:14:26.360 --> 0:14:29.000 Pontter trying to merge Bear in Monsano, are trying to 0:14:29.120 --> 0:14:32.320 merge China Camp come in and bought some Jenna. I 0:14:32.400 --> 0:14:35.120 notice CRDA Dows spun off part of their seed group 0:14:35.160 --> 0:14:39.240 to a Chinese company. So there's big money in this 0:14:39.320 --> 0:14:42.040 seed business. And if there's one thing that's hurting the 0:14:42.120 --> 0:14:45.160 American farmer, if any farmers are out there listening to 0:14:45.200 --> 0:14:50.200 this podcast, is they've underestimated how much technology has helped them, 0:14:50.240 --> 0:14:55.000 and they're still mentally marketing a crop like it's or 0:14:55.000 --> 0:14:57.760 oh five, and so they're they're thinking they're gonna grow 0:14:57.760 --> 0:15:00.120 a hundred and thirty five bushel corn, and they're on 0:15:00.200 --> 0:15:04.560 a hundred bushell corn. And so the American farmer. If 0:15:04.560 --> 0:15:06.160 you go to a trade show, if you go to 0:15:06.200 --> 0:15:10.200 any egg show, there's the John Deer Tractors, There's this planter, 0:15:10.440 --> 0:15:14.720 there's this fertilizer, there's this seed company. Tens of thousands 0:15:14.760 --> 0:15:17.320 of farmers at these shows. You go to a marketing meeting, 0:15:17.440 --> 0:15:20.520 there's Tommy Grisafi up there on stage talking at eighteen 0:15:20.560 --> 0:15:24.280 farmers in nowhere, North Dakota. They don't want to talk marketing. 0:15:24.320 --> 0:15:28.400 They want Everyone loves production agg it's fun, it's exciting, 0:15:28.480 --> 0:15:31.800 it's sexy, it's fun driving a tractor. If you ever haven't, 0:15:32.160 --> 0:15:33.720 give me a call and we'll set you up with 0:15:33.760 --> 0:15:35.520 one of the customers I have in Pennsylvania and you 0:15:35.560 --> 0:15:37.920 go out there and interview them, and it's fun. It's 0:15:37.920 --> 0:15:40.320 one of the best jobs you can have in America. 0:15:40.560 --> 0:15:42.520 It's not one of the most profitable anymore, but it's 0:15:42.560 --> 0:15:46.760 one of the best jobs you can have. And so technology, Uh, 0:15:46.800 --> 0:15:50.560 there's things like auto Stair. There's a tractor being developed 0:15:50.560 --> 0:15:54.200 by case. I h that's uh, what's the word anonym? Uh? 0:15:54.480 --> 0:15:57.480 It drives itself? What do you You don't ask me 0:15:57.520 --> 0:15:59.080 to spell it. I could barely say that's going to 0:15:59.200 --> 0:16:01.960 ruin one of the best jobs in America. Well, yeah, 0:16:02.000 --> 0:16:04.280 there'll be a guy driving another tractor next to it, 0:16:04.320 --> 0:16:07.040 maybe planting the crop, and and that tractor will be 0:16:07.240 --> 0:16:09.120 tearing up the ground next to it. So there'll be 0:16:09.120 --> 0:16:12.480 someone around with a remote control, almost like flying a drone. 0:16:12.560 --> 0:16:17.800 So technology has changed agricultural agriculture in a big way. 0:16:17.840 --> 0:16:20.080 And so I'm a technology bolt when I do speeches. 0:16:20.600 --> 0:16:24.200 I come from a stock trading background. Uh. But I 0:16:24.240 --> 0:16:27.760 started trading Imani smps when they started on Globex. I 0:16:27.760 --> 0:16:29.840 remember the first day I traded Emeny's the day they 0:16:29.840 --> 0:16:32.880 open the think they traded eighteen thousand contracts. And I 0:16:32.920 --> 0:16:36.080 had a Globe station at my office and a project day, 0:16:36.120 --> 0:16:38.600 and so I was always big on technology. What it 0:16:38.680 --> 0:16:41.560 hit me I went over to Germany and I saw 0:16:41.600 --> 0:16:45.600 that the Boon contract was trading electronic, that London had 0:16:45.640 --> 0:16:47.480 lost it. Joe, I don't even if you know, if 0:16:47.480 --> 0:16:49.520 you're old enough to remember all this stuff. But the 0:16:49.520 --> 0:16:51.760 Boon used to trade in pits in London, and then 0:16:51.840 --> 0:16:54.680 it moved over to the u X Exchange. And uh, 0:16:54.920 --> 0:16:57.120 when I realized there were no pits anymore, it made 0:16:57.120 --> 0:17:00.600 me think when I went back to Chicago, when are 0:17:00.640 --> 0:17:02.800 the pits going to go away in Chicago? And most 0:17:02.840 --> 0:17:04.520 of them are gone now. And so I'm a big 0:17:04.560 --> 0:17:07.480 technology bull and I like to get out there and 0:17:07.480 --> 0:17:10.240 and and educate the farmer. What's funny about the American 0:17:10.280 --> 0:17:13.000 farmer is if you ask them to see their iPhone 0:17:13.080 --> 0:17:16.399 or whatever smart device they use, they have every app. 0:17:16.480 --> 0:17:18.760 They can tell you how much it rained in every field. 0:17:19.119 --> 0:17:21.080 They can tell you how much fertilizer they need. They 0:17:21.119 --> 0:17:24.879 get text and emails to add more fertilizer. Too. Is 0:17:25.240 --> 0:17:27.600 it's almost like a recipe to grow this perfect crop. 0:17:27.960 --> 0:17:33.200 And so if you aren't improving through technology and better marketing, 0:17:33.560 --> 0:17:36.199 your neighbor is and they're gonna pass you up. And 0:17:36.200 --> 0:17:38.720 I'll tell you one other thing. And this should scare people. 0:17:39.160 --> 0:17:41.959 Agriculture is not just an American thing. When I went 0:17:42.000 --> 0:17:45.640 to the John Deeer factory in Waterloo, Iowa, the John 0:17:45.680 --> 0:17:49.000 Deere tractors are going overseas. And so if you you know, 0:17:49.119 --> 0:17:52.439 follow Howard Buffett, follow Warren Buffett Son Howard. He's a 0:17:52.440 --> 0:17:54.920 farmer in central Illinois right next to one of my customers. 0:17:55.200 --> 0:17:57.359 He's going all over the world showing people how to 0:17:57.400 --> 0:18:01.479 grow crops. Technology and agger culture is a world market. 0:18:01.720 --> 0:18:04.040 And although America is still a leader, if they don't 0:18:04.040 --> 0:18:06.520 watch themselves, they're going to get passed up. Tommy, you 0:18:06.600 --> 0:18:09.760 just reminded me that one of our coworkers, and actually 0:18:09.840 --> 0:18:14.000 a previous off Lots guest, Lorcan rosh Kelly, has a 0:18:14.040 --> 0:18:17.000 cow farm and he was telling us once he actually 0:18:17.000 --> 0:18:20.000 has a smartphone app that I think tells him when 0:18:20.040 --> 0:18:23.760 his cows are about to give birth. Uh So, technology 0:18:23.800 --> 0:18:27.040 and in all types of agriculture right now. But I'm 0:18:27.080 --> 0:18:30.040 just wondering when we start to think about technology. Uh 0:18:30.080 --> 0:18:31.800 you know, when Joe and I talked about it every day, 0:18:32.000 --> 0:18:34.359 we usually talk about it in the context of companies 0:18:34.400 --> 0:18:38.000 like Apple or Amazon, and I'm wondering if a similar 0:18:38.080 --> 0:18:42.159 dynamic is present in agriculture where you get these big 0:18:42.240 --> 0:18:46.879 farming companies that essentially develop an edge because they have 0:18:47.040 --> 0:18:49.600 lots of money to spend on tech and that makes 0:18:49.600 --> 0:18:51.960 them more efficient, and then does that mean that they 0:18:52.000 --> 0:18:55.440 go on to become big, big players in the commodities 0:18:55.520 --> 0:19:00.960 trading market as well. I think you're correct the American 0:19:01.000 --> 0:19:04.840 farmers getting bigger, not smaller. They're getting more efficient. It's 0:19:04.840 --> 0:19:08.960 really hard to run any business without adequate capital. I've 0:19:09.000 --> 0:19:13.359 met some incredibly large farmers, and if you're not getting 0:19:13.359 --> 0:19:16.560 with it, you're going behind one thing. You touched on 0:19:17.240 --> 0:19:20.000 something very important, and they want you. It's going to be. 0:19:20.040 --> 0:19:22.159 What I talked about next year in my speaking season 0:19:22.720 --> 0:19:26.840 is that Amazon recently bought Whole Foods, and Amazon might 0:19:27.040 --> 0:19:31.520 single handedly be changing how we shop for food and 0:19:31.520 --> 0:19:35.160 how agriculture is and what products we grow in America. 0:19:35.720 --> 0:19:40.480 I think sometimes there's a pushback against non GMO or 0:19:40.560 --> 0:19:43.240 this thing or that thing, and the American farmer has 0:19:43.280 --> 0:19:45.960 to be listening to what the consumer wants. And Amazon 0:19:46.040 --> 0:19:49.040 knows what the consumer wants because no one has more 0:19:49.119 --> 0:19:51.320 data on what you like to purchase in Amazon. Would 0:19:51.320 --> 0:19:54.480 you guys agree, No question. So watch out for Amazon 0:19:54.520 --> 0:19:57.600 Whole Foods and how that changes agriculture the next five years, 0:19:57.640 --> 0:20:01.240 ten years. The supermarket industry. There's a supermarket in my 0:20:01.320 --> 0:20:05.280 hometown called Stracking Me Until family store for fifty sixty years. 0:20:05.280 --> 0:20:08.200 They filed bankruptcy a week ago. You know, why is 0:20:08.240 --> 0:20:10.840 that happening? What's going on? How could this family mom 0:20:10.840 --> 0:20:14.600 and pop grocery store with change we filing bankruptcy. Things 0:20:14.600 --> 0:20:18.520 are changing and agriculture is changing. But I no doubt 0:20:18.560 --> 0:20:22.000 my mind, the single reason I'm up in South Dakota, Minnesota, 0:20:22.480 --> 0:20:25.840 North Dakota is because technology changed and folks are able 0:20:25.840 --> 0:20:28.960 to grow way more bushels in a shorter time. And 0:20:29.000 --> 0:20:31.800 when that happens with your supply and demand, that makes 0:20:31.800 --> 0:20:35.119 the markets go down. We've talked about how the market works, 0:20:35.200 --> 0:20:37.639 We've talked about some of the big picture changes, the 0:20:37.720 --> 0:20:40.480 role of technology. Now let's get into you know we're 0:20:40.480 --> 0:20:43.440 talking about it in the beginning. This market has been 0:20:43.440 --> 0:20:47.560 pretty volatile lately, if you like exciting markets grains or 0:20:47.600 --> 0:20:52.080 where it's at now. Just weat also some pretty shocking 0:20:52.080 --> 0:20:56.200 action and soybeans lately, which very quickly erased a big downturn. 0:20:56.640 --> 0:20:59.880 What's the big picture of why we're seeing such exciting 0:21:00.040 --> 0:21:03.200 swings right now? Is it all weather? Is it demand 0:21:03.280 --> 0:21:06.359 from overseas? What are the factors? I'll take choice see 0:21:06.359 --> 0:21:10.919 all the above. So China has an insatiable demand for 0:21:10.920 --> 0:21:13.639 our soybeans. Every time the government tells you that we 0:21:13.680 --> 0:21:16.040 have a lot of soybeans, and that would make traders 0:21:16.080 --> 0:21:18.320 and speculators think the price is going to go down 0:21:18.680 --> 0:21:19.879 all of a sudden. At the end of the year, 0:21:19.920 --> 0:21:24.160