Latest / Bloomberg Intelligence / Teucrium's Gilbertie Sees Continued Strength in Corn (Audio)

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Teucrium's Gilbertie Sees Continued Strength in Corn (Audio) · Bloomberg Intelligence

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  Speaker 1: Broadcasting live to New York, Bloomberg eleventh wo to Washington,
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  Speaker 1: got gone. This is taking stock, coming up on taking
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  Speaker 1: stock investment opportunities in corn, in soybeans, in bushels of wheat.
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  Speaker 1: We're gonna be speaking with Sal GILBERTI. He is the president,
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  Speaker 1: chief investment officer, and co founder of two Cream Trading.
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  Speaker 1: We'll get a look at investing in commodities right now.
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  Speaker 1: thank you and again recapping stocks higher SMP five hundred
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  Speaker 1: index up point now to two thousand sixty five, a
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  Speaker 1: Bloomberg Business flash. You're listening to taking stock with Kathleen
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  Speaker 1: Hay and Pim Fox on Bloomberg Radio. Drought drought is
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  Speaker 1: cutting the wheat production in South Africa to a four
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  Speaker 1: year low. The wheat crop is estimated to be cut
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  Speaker 1: by about eighteen percent. Does this offer an investment opportunity?
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  Speaker 1: Let's find out from Sal GILBERTI. He is the president
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  Speaker 1: and the chief investment officer and co founder of two
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  Speaker 1: Creum Trading LLC. He's based in Brattle Burrow, Vermont, South
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  Speaker 1: Thank you very much for being with us. Good to
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  Speaker 1: be here. Just tell us a little bit about two
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  Speaker 1: Creum Trading and what it is you specialize in and
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  Speaker 1: how you came to find this particular area of investments. Sure, um, Well,
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  Speaker 1: I started way back at cargill Um in the eighties,
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  Speaker 1: and so I've always had interest in energy and agriculture
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  Speaker 1: come from an agricultural family. And um, there weren't any
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  Speaker 1: e T s um single commodity ets available once e
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  Speaker 1: T S became popular with it particularly for gold and oil,
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  Speaker 1: for single commodity AGGS, and and for corn, which is
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  Speaker 1: just an enormously important crop globally. And so I started
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  Speaker 1: to graham with some partners and some investors, and we
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  Speaker 1: are the sponsors of single commodity e t F to
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  Speaker 1: trade on the New York Stock Exchange ETPs um. Corn
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  Speaker 1: is the corn fund tickers c O r N, Wheat
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  Speaker 1: is a wheat fund, easy tickers w E A t UH,
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  Speaker 1: soybeans s oy B, and sugar is kNs c A
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  Speaker 1: N E. And so we we believe that investors buy
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  Speaker 1: and large the large majority investors don't trade futures. They
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  Speaker 1: don't have access to futures, they don't have the expertise
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  Speaker 1: they need to trade a leverage product like that. And
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  Speaker 1: we develop these et p s in order for the
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  Speaker 1: the average investor, M retailing institutional to gain direct exposure
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  Speaker 1: to these important agricultural products right on the New York
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  Speaker 1: Stock Exchange. Well, so let's speak and by talking about
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  Speaker 1: corn then because I note that corn futures for July
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  Speaker 1: delivery up about one percent to three dollars and eighty
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  Speaker 1: two cents a bushel tell us about the long term
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  Speaker 1: trends in corn. Long term trends and corn, along with
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  Speaker 1: soybeans and wheat, are the usage continues to increase. It's
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  Speaker 1: it's primarily driven by population growth. Globally, the population expands
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  Speaker 1: by roughly seventy five to seventy eight million people per year,
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  Speaker 1: which is to put that in perspective, it's hard for
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  Speaker 1: me to grasp those numbers. That's two states of California.
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  Speaker 1: It's the equivalent of the population of California doubling every
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  Speaker 1: year as new added population on the planet Earth. And
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  Speaker 1: in order to sustain the use of of the agricultural
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  Speaker 1: commodities that all those people use, you would need arable
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  Speaker 1: land added to what is already arable land, um twice
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  Speaker 1: the size of Vermont. That land area to be added
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  Speaker 1: every year just to feed the new people and corn,
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  Speaker 1: corners and everything. If you if you go to fill
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  Speaker 1: up your suv a service station, UM, You're going to
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  Speaker 1: use about a bushel of corn because of the ethanol
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  Speaker 1: content of that gasoline. That's corn's number one use in
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  Speaker 1: the United States, it's actually the number two used globally. Globally,
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  Speaker 1: the number one used for corn is animal feed and
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  Speaker 1: so any meats that you consume, any animal proteins that
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  Speaker 1: you can sue, including aquacultural raised fish, that's going to
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  Speaker 1: use corn as well. That's corns second largest use. If
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  Speaker 1: you use paper, you're looking at corn starch to hold
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  Speaker 1: that together. If you drink sweet and drinks corn syrup.
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  Speaker 1: Those are corn top four uses. They you know, the
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  Speaker 1: little plastic cups should get at summertime picnics with the
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  Speaker 1: green stripe around them, they're made from corn. Um. Consumers
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  Speaker 1: in the modern global economy cannot exist without corn touching
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  Speaker 1: their lives during the day, every day in multiple spots.
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  Speaker 1: And so corn is an incredibly critical commodity that people
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  Speaker 1: should look at with their financial advisors, because you know,
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  Speaker 1: most people with whom we speak they have oil exposure.
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  Speaker 1: They understand that no matter what happens to the economy,
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  Speaker 1: they're gonna get up, they're gonna turn their heat on
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  Speaker 1: or off, they're going to drive their car um, They're
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  Speaker 1: going to use energy, but they're also going to use food,
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  Speaker 1: and they're going to use the products that also UM
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  Speaker 1: are derived from these these crops of corn, soybeans, and
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  Speaker 1: wheat in particular, So you're bullish on the price action
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  Speaker 1: in corn, soybeans, and wheat UM. I think when you
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  Speaker 1: step back and look at it, the global demand is
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  Speaker 1: such that I'm definitely bullish on usage. So I have
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  Speaker 1: no doubt that we will use more of those commodities
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  Speaker 1: over time as time goes on deep into the future.
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  Speaker 1: In terms of price action, you know, we've seen global
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  Speaker 1: usage going up, but the past three years have been
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  Speaker 1: in deep bear markets for for all of these commodities,
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  Speaker 1: and the reason is that they're supply driven. The demand
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  Speaker 1: is very steady, it's very inelastic. Farmers respond very quickly,
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  Speaker 1: and so what you have is we've had perfect weather
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  Speaker 1: for three consecutive years and that's given us um ample crops,
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  Speaker 1: ample supplies. But with the usage basically unrelenting, it's growing
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  Speaker 1: at an amazing rate, particularly soybeans and China China UM.
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  Speaker 1: You know their economy. I was just listening to a
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  Speaker 1: webinar from JPMorgan Asset Management. They were highlighting how the
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  Speaker 1: Chinese GDP contribution to growth has declines in two thousand nine,
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  Speaker 1: yet the imports of soybeans, of rocketed So I find
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  Speaker 1: it very interesting that the last thing people will do
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  Speaker 1: is allow themselves or the animals to be cold or hungry,
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  Speaker 1: and yet many people overlook agricultural commodity is a key
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  Speaker 1: component of exposure in their portfolios. Now, so you begin
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  Speaker 1: by just talking about futures, is using e t ps?
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  Speaker 1: Is that less volatile than futures trading? Uh? Not necessarily
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  Speaker 1: e tps because they hold futures and are there unleveraged UM.
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  Speaker 1: So you know, they make it pretty easy to understand.
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  Speaker 1: But because they hold futures, they are likely to be
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  Speaker 1: as volatile as futures. I think the advantage to using
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  Speaker 1: an et P is one doesn't need the expertise to
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  Speaker 1: deal with UM the leverage the futures entail, and one
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  Speaker 1: doesn't need the expertise to roll. Remember, contracts expire and
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  Speaker 1: you have to either do something about that if you
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  Speaker 1: own it, or you know, a whole bunch of corn
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  Speaker 1: roll it every month. Thank you very much, Sal GILBERTI.
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  Speaker 1: He is the president and the chief investment officer and
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  Speaker 1: co founder of two Creum Trading. They're based in Brattleborough, Vermont.
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