Miller Magazine Issue: 145 January 2022

70 INTERVIEW MILLER / january 2022 ment to help levitate the supply chain bottlenecks. Is the max COVID-19 pain behind us? It seems so, and with that thought, the max supply chain stress should be as well, and thus with a bit of time, optimism and smart business practices, so too should be the max food in- flation/food crisis issues as well. The outlier of course remains that of weather and mother nature- right now the markets are dealing with La-Nina in South America which can greatly alter global supplies and we continue to monitor 2022 weather for the Nothern Hemisphere as well- but overall as it stands right now the world is not getting any tighter vs what we saw in 2021. HOW TO MANAGE PRICE RISKS IN A VOLATILE GRAIN MARKET? Markets are changing quickly. It is difficult to follow commodity prices. How can grain producers, trad- ers, and millers become more resilient to shocks and stresses in the grain supply chain? How can they mit- igate trade risks? The simple answer is to hedge themselves- whether that’s with different suppliers, different modes of trans- portation, different origins and yes of course hedging themselves in the markets from price risks. Each par- ticipant in the market has their own specifics, and thus a different approach to managing risks, but the point is simply, those who remain proactive on the subject are in a better position to adapt to a new set of risks when they become present. Managing price risk is exactly the ser- vice I provide to clients, whether it's futures, puts, calls, or a combination of all of them, commodity price risk man- agement remains a crucial part in mitigating trade risks in today's volatile world. Also, the more aware traders are of market-moving events, the quicker they are able to adapt and change to it and manage potential risks as a result. It's always better to be proactive vs reactive. Which region(s) will drive world grain mar- kets in the future? In the short term, it's all on South American weather and the La-Nina that remains present there, then it flips to U.S. and Black Sea weath- er for corn, soy and wheat influence. Given the nature of the commodity markets- it's typically that of supply-led issues that gain the most at- tention by the trade. The pandemic has changed the settings of the market. The role of the states in the ag- riculture and food sector is increasing. Food nationalism is on the rise. Prohibitions, quo- tas and tax practices increase food security concerns. Do you agree that the world is in the era of nationalism and protectionism? Yes, I would agree that some exporting/importing na- tions are in protectionism indeed- the rise of inflation and basic consumer needs have increased greatly around the world in 2021 and nations are indeed taking nec- essary steps to help protect domestic consumers. This does indeed alter the fundamentals of the market, but in times of great uncertainty, governments take actions to keep domestic consumers calm and offer stability. There are in some instances where fundamentals are healthy from the supply side, government actions push the do- mestic market to react in another and as such protection- ism efforts are put in place for the wrong reasons- but they are what they are and price continues to do the work of moving the market. I do understand that some nations due to political, fiscal and monetary reasons have no other option, but free market overtime tends to do the job of demand rationing and creating opportuni- ties for farmers and traders to respond. Likewise, over- supply situations push prices lower and with time free markets push farmers to produce less and consumers to consume more. Russia introduced a wheat export quota. Do you think wheat prices would increase further with this decision? Yes, Russia is implementing a wheat quota on wheat of 8 MMT from Feb 15th to June 30th. This has been largely advertised and well known by the market. Overall the market expects wheat exports to be 33-34 MMT for YTD and with these quotas, it seems this is still achievable. This can keep FOB prices firm as farmers likely remain reluctant sellers going into 2022, but this factor alone will not keep prices higher forever. We still have other global competing origins to consider, global demand flows and 2022 crop ideas to trade. Historically speak-