[Deep Dive] Global Ag Trade: A Fundamental Analysis

Preamble

I am writing this to introduce the first edition of what is planned as a long-term monthly series of thought pieces on agricultural commodity markets.

Over a 35-year career, I have developed a unique perspective on global commodity markets.  With roles as an analyst, trader and senior executive at a major global trading house, I understand how major physical traders approach the markets. As a consultant and advisor, I have worked directly with individuals and firms to navigate commodity market risk and opportunity. The goal of this series is to share that unique perspective with participants across the commodity spectrum.

Each monthly paper will apply a data-driven, analytical approach to the major trends and current events impacting commodity markets. Synthesizing publicly available fundamental data with the informed perspective of a physical trader, each instalment will provide observations and insight to help readers better navigate the risk and opportunity in agricultural markets. For those who are trading actively, as well as market watchers and players adjacent to the commodity space, the series will help readers better understand how changes in the commodity landscape will impact their own portfolio, business and industry.

The initial paper will cover the significance of cross-border trade for the global agricultural system and the disruptive potential of emerging changes for the long-term trends in trade flows.

Part 1: Analytical Framework

For decades, global trade of agricultural commodities has enabled growth, promoted investment, created value for farmers and raised living standards of consumers around the world. And while cross-border flows of most commodities remain robust, there are emerging signals of disruption in the long-term trends and trade patterns that have been key drivers of global trade over the past twenty years.  

As these forces play out, commodity futures markets will be impacted. Understanding the underlying foundation, as well as the nature of changes, can help market participants both anticipate and react to the evolving landscape.

Agronomics is Key Driver of Supply