How Blockchain will Impact Agriculture

March 16, 2018 in Agriculture, Commodites and Hedging, Commodities
By Betsy Freese

Technology presents amazing opportunities for farmers, says Bill Even, CEO of the National Pork Board. Blockchain, for example, is in a space that’s moving very rapidly and is already impacting the meat industry. He shares the following thoughts about the new technology.

What is blockchain?

Blockchain is an emerging way for businesses, industries, and public organizations to almost instantaneously make and verify transactions using a digital transaction ledger —streamlining business processes, saving money, and reducing the potential for fraud.

How is blockchain used for businesses?

Maersk, for example, is starting a new company to build the system with IBM for international shipping. They estimate they can get $1 trillion out of the cost of global logistics and shipping alone. Trillion with a “T.”

What drives innovation in business is the ability to save money, make money, or drive efficiencies in the chain. When you’re dealing with international paperwork, whether it’s moving pork or flat-screen TVs, it doesn’t matter. That traceability is going to appear where there’s documentation occurring in all kinds of languages. That is where you’re going to see this hit first.

There’s an active effort to use blockchain to trace pork from farms in China.

Why is the Pork Board studying blockchain?

It is incumbent upon the Pork Board to figure out how we get engaged in these systems to understand what are going to be the rules of the road, and what are the implications.

Traceability and transparency is something that is becoming increasingly demanded by the supply chain. When a company or brand puts something on a label or website they want to make sure it is actually verifiable. There’s nothing worse for one of these brands than to have somebody say, “Aha, you were lying. These pigs weren’t well treated.” Or, “Aha, you were lying, these pigs weren’t in this environment or these chickens were not cage-free.” That sort of thing can really damage your brand.

When companies make sustainability, social responsibility, and environmental claims they want to make sure that everybody in that supply chain is doing what they said they’ve done.

What are the first impacts of blockchains for agriculture?

Most of the initial efforts in blockchain in agriculture is with traceability. China has used the technology to trace pork and beef. You can create an efficient supply chain that allows you to trace products and improve transactional efficiencies. It’s about improving margins by reducing bureaucracy while supporting business continuity via traceability. Companies like Wal-Mart are adopting it because it saves a lot of money.

Consumer-facing applications are a by-product that can be sourced from blockchain data. There is the ability of each of the players in that system to tell a little bit of their story. That ends up building consumer confidence. The consumer can look at a label and say, “Oh, I understand what diet this animal was fed. I understand where they were raised. I understand what packing plant they came from.”

Food safety has been a concern in China, so blockchain technology is developing at a faster rate there than in the U.S. People want to be confident in the food they’re eating, whether that’s U.S. pork, or Chinese beef. That’s why you’re seeing innovation occur in some of these countries that are really trying to get behind the fact that it’s safe to eat pork, or it’s safe to eat beef, or it’s safe to eat eggs or poultry or drink the milk. That seems to be really what’s driving it.

For full article:

Are Grain Markets Sparking Hedge Fund Interest?

August 21, 2017 in Commodities

Happy Hump Day! What a week it has been thus far for the grain markets. Consistent weather concerns that the Corn Belt is facing higher temperatures drove the grain markets higher. Today we saw another spike as counties from South Dakota through Nebraska and as far east as Indiana are under heat watch at the National Weather Service after the Corn Belt reached triple-digit temperatures.

This week the media reported on hedge funds taking net long positions in the grains after the CFTC reported the largest positions taken since June 2016. The data shows an unwinding of a short position and resulting in a decent net long position in corn. The media attributed this shift in interest to money managers seeing grains as the cheaper alternative to an overvalued and expensive equity market.

SMLXL reported accelerated hedge fund buying grains could lead to a rapid reversal on positive crop production news in the future. The notions that the market is vulnerable to a sell off because fund managers are long is crazy. Positions have shifted. We are late in terms of a typical weather scare as this happens in the beginning of June.

Back in 1979 Business Week ran a famous cover story: The Death of Equities. We know how that turned out. Yesterday Bloomberg ran the store that Goldman Sachs is reviewing their commodities business and biggest banks commodities incomes have halved. (See yesterday’s post).

Now we start to see an epic shift in commodity prices. The market quickly unwound the reflation trade after it became clear that the US president is going nowhere. We now face a worsening drought in the Northern Plains and has gotten the attention of money managers.

Please see the following articles we read this week. Hedge Funds Buy Grains at Record Pace, as Weather Woes Threaten Crops

New York Times: A Possible Alternative to Stocks and Bonds: Commodities?

Prototype intuitive intuitive thought leader personas parallax paradigm long shadow engaging unicorn SpaceTeam fund ideate paradigm. Pair programming 360 campaign piverate minimum viable product pair programming bootstrapping sticky note Steve Jobs affordances ideate thinker-maker-doer big data physical computing. Workflow driven innovate long shadow SpaceTeam grok pivot.

  • Something to say
  • Listing things in a list
  • Pay close attention to number 4
  • What happens next will shock you

Marex Solutions Comes to Market

July 18, 2017 in Commodities
To follow up on our Commodities Are Dead piece… As the banks have left or are leaving Marex Solutions is coming to market. We know them well and think very highly of their initiative.
Please see the following story in Bloomberg: