Animal Spirits Podcast Talk Your Book: The Craziest Commodities Market Ever
Mar 12, 2022
Sal Gilbertie, CEO and founder of Teucrium ETFs, dives into the chaotic world of commodities markets. He discusses the impact of the Ukraine conflict on agricultural demand and price volatility, highlighting skyrocketing corn prices and wheat ETF surges. The conversation also touches on the vital role of soybeans in the food supply chain and their influence on consumer costs. Gilbertie emphasizes farmers' strategies to weather market fluctuations and the resilience needed amidst ongoing geopolitical and environmental challenges.
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Agriculture's Natural State
- Agriculture's natural state is to trade at its cost of production due to government subsidies.
- Demand for grains like soybeans, wheat, and corn consistently grows, leading to price spikes when supply is disrupted.
Wheat Export Disruption
- Russia and Ukraine are major wheat exporters, comprising 30% of the global export market.
- Disruptions due to conflict severely impact countries reliant on these exports.
Producers as Short Sellers
- Producers act as short sellers in the commodities market to hedge against future price fluctuations.
- This hedging creates market dynamics that can exacerbate price movements.