- Mark Soderberg, ADMIS: Was recently the high estimate for USDA's next round of US production guesses.
- Jeff McPike, Waseda Commodities: The next country to influence global demand could be India.
- Jose Rossato, Coplana: Brazil could double its grain production over the next 11 years.
This past June, when my friends at Barchart invited me to moderate a panel discussion at their annual Grain Merchandising & Technology Conference, my initial response was yes, though in the back of my mind I got a chuckle out of the idea of me being associated with the terms “moderate” and “panel discussion”[i]. That being said, I was intrigued by the subject matter, “Exploring the Global Landscape of Grain” and the gentlemen who had already agreed to take part on the panel. Covering the US situation would be Mark Soderberg from ADMIS[ii]. Mark and I did a joint presentation on US grain markets for Barchart the previous year in Nashville. Jeff McPike of Waseda Commodities was also on the playbill. I’ve known of Jeff for many years, though I hadn’t had the opportunity to meet him in person. Jeff’s background is of a world grain trader and traveler, so I was looking forward to our conversations. When I was first asked to moderate, the South American representative on the panel was still to be determined. It was our great fortune it turned out to be Jose (Hard J sound) Rossato of Coplana – Cooperativa Agroindustrial. One of the highlights of my trip to Orlando was getting to visit with these three gentlemen (as well as my son Ben) over dinner during the conference. With introductions out of the way, I present to you the points that stood out to me from the panel discussion itself.
I’ll start with a brief summary of the highlights from each of the panelists. But first I had to set some guidelines. While I didn’t try to take one through airport security, I told the audience to imagine a Swear Jar on the podium with me. Every time the four-letter word “USDA” was used without the proper mocking tone, a dollar would be put into the jar. More on this later.
Mark is based out of Chicago. After gathering the data, he posted his production estimates for USDA’s September round of Supply and Demand guesses, coming in at the high end for both corn and soybean crops. (Mark, my apologies if I’m incorrect here. Also, I don’t recall what your exact numbers were. Folks, feel free to look up the estimate tables to check my memory). If my memory serves me, Mark was debating with himself if his number was too high or too low. The bottom line remains unchanged, though: The US is going to have a lot of grain, potentially a record amount of grain to put away and eventually move by the time the 2024 harvests are done. This could potentially be a problem for both the US cash and basis markets this fall and winter.
At dinner Sunday evening, I was captivated by Jeff’s stories from his travels around the world. It brought to mind the many times I had the opportunity to listen to Urban Lehner, DTN’s Editor Emeritus, over the years. A piece of advice to any and all: When in the company of those who have seen much of what the world has to offer, with all of the differences that entails, it is best to close one’s mouth and open one’s ears. During the panel discussion Jeff raised many key global issues. When he was asked specifically what country could next change global supply and demand dramatically his answer was instantaneous: India[iii]. I followed the question from the crowd by asking Jeff if the BRICS (Brazil, Russia, India, China, South Africa and allies) Alliance would skew India’s impact on global supply and demand. Yes, until weather (and possibly military conflicts) changed things short term.
Jose is based out of Sao Paulo, what I consider to be Brazil’s New York (from the one time I visited the country), but had grown up on a farm, following in the footsteps of his father and grandfather[iv]. I thoroughly enjoyed getting to meet Jose for the first time this past week, and he was also kind enough to share his stories with us at dinner. However, it was something he said during the panel discussion that will stick with me, much like the comments made by R.J. O’Brien’s Bell Chen back in 2018[v]. Jose shared the projection that Brazil’s total grain output is expected to double over the next 11 years. (Yes, Jose specifically said “11 years”, a fact I found interesting.) It took a moment for this to sink in, so I let it sit for a moment and you could hear the crowd grow silent.
I believe it was Jeff who followed with the question on everyone’s mind, “Does Brazil have the infrastructure and logistics in place to make this growth a reality?” Jose mentioned there have been improvements in both highways and ports, to which Mark asked about the famous (infamous) BR-163. Jose mentioned another highway was under construction, paid for by private sources, bringing a follow-up question from my son Ben as to the likely identity of the benefactor. The answer was indeed China. I added to this discussion by querying Jose about China’s role in the recent improvements made to Brazil’s infrastructure, with his answer being “the past 6 years or so”. Think about that for a moment, and how it lines up with the social media-driven trade war that began back in 2018, and Mr. Chen’s aforementioned analysis. The bottom line is the reality of the trade war is it made Brazil’s agriculture industry great again.
The panel would go on to discuss markets as weather derivatives and global politics trumping economic factors such as the value of world currencies ($DXY) (BRLUSD). But the point that will go down in the annals of these Barchart Conferences will be the projections of Brazilian growth and the possible (likely) effects on US agriculture industry, including an accelerated move to consolidation.
Oh yes, the swear jar. I’m proud to announce that there wasn’t a single dollar owed by the end of the panel discussion. However, I can’t say that for the conference at large. At the end of one particular session, my friend Cody Gerlach, Director of Strategic Sales for Barchart, announced during Q&A that nearly $30 was owed to my theoretical swear jar. I appreciated his comment.
[i] As those who recall my last appearance on IPTV’s Market to Market program can confirm.
[ii] Mark was one of those who found the humor in me being a “moderator”. He came up to me at the opening reception with a smile on his face and asked, “You are the moderator?” We both laughed at the twisted reality of it all.
[iii] Jeff also mentioned his love for Africa, particularly regarding growth over the coming years. Me being me, I had to comment how his answer reminded me of the song by Toto.
[iv] It is always interesting to me that no matter where we travel and who we talk to, at its core the story of farmers around the world is generally the same.
[v] At the US Soybean Export Council Buyers Conference in Cartagena, Colombia, Mr. Chen said unequivocally something to the effect of Chinese (soybean) buyers were doing the math to basically cut the United States out of the equation. Bach then you could’ve heard a pin drop when he said it. Since then, we have seen he was spot-on with his announcement.
On the date of publication, Darin Newsom did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
