Money Matters with Greg
Needing guidance on finances, or just curious about investments? Join CEO and Owner of Farrall Wealth, Greg Farrall, as he dives into all things relating to money and often interviews interesting people he is fortunate enough to call his friends.
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Money Matters with Greg
Episode 153: Gold Hits All-Time Highs While Farmers Face Uncertain Harvest Season
Tommy Grisafi brings a wealth of commodity trading knowledge to this eye-opening discussion on agricultural markets, global economic trends, and the realities facing American farmers. As spring planting season approaches in the Midwest, Tommy offers a candid assessment of what producers can expect: "How are farmers going to make money this year? They may not."
The conversation explores how commodity markets are responding to major global forces. Gold has reached all-time highs while money flows out of American investments toward international markets. Cattle prices have surged to record levels due to reduced herd sizes – a direct consequence of rising interest rates forcing ranchers to sell animals to pay down operating loans that tripled in cost. Meanwhile, corn may offer modest profitability while soybeans struggle against South American competition and wheat prices collapse as the Russia-Ukraine conflict shows signs of potential resolution.
Tommy reveals where agricultural wealth truly accumulates – not necessarily in annual profits but in land values that have tripled over 15 years. "You may lose $100,000 farming in a year, but as long as land values stay high, which there's no sign of them necessarily falling apart, people are still tripping over themselves to buy land because they're not making any more of it." This long-term perspective explains farmers' resilience through difficult seasons. The episode concludes with a remarkable anecdote about a farm sale where $700,000 worth of stored corn was nearly overlooked – highlighting the "squirrel mentality" of saving that characterizes many successful agricultural operations. For anyone interested in markets, farming economics, or understanding where your food comes from, this conversation offers valuable insights beyond typical financial news.
Some highlights:
• Cattle prices have reached all-time highs due to reduced herd sizes, partly caused by higher interest rates forcing ranchers to sell animals to pay down debt
• Gold has hit all-time highs as investors diversify away from US markets, with money flowing to global assets and other markets like Germany
• Corn may offer some profitability this year, while soybeans face intense competition from South America and wheat prices have fallen as the Russia-Ukraine conflict shows signs of resolution
• Despite challenging commodity prices, farmland values have tripled over the past 15 years, creating substantial wealth for landowners
• The upcoming March 31st USDA planting intentions report will be crucial, with early indications suggesting farmers plan to plant substantial corn acreage
• Interest payments on US national debt now exceed the entire defense budget at approximately $1.1 trillion annually
Follow Tommy on social media and RFD TV as "Ag Bull" for market updates and analysis.
Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC.
The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may suit you, consult the appropriate qualified professional before deciding.
Welcome to Money Matters with Greg, where we dive into the money conversations shaping your life, from investments to estate planning, insurance to taxes. We cover it all with a fresh perspective. Join Greg and his guests each week to get inspired and take control of your financial future. Let's get started. Securities and investment advisory services offered through LPL Financial, a registered investment advisor, member FINRA, sipc.
Speaker 2:Hey, it's Greg. I just want to remind everybody that the opinions voiced in this podcast and on WVLP on our radio show Money Matters with Greg, 103.1 FM here locally, at FM here locally, they're for general information only and are not intended to provide specific advice or recommendations for any individual or business. To determine which strategies or investments may suit you as an individual, consult the appropriate qualified professional before deciding. Thank you, hey. Good afternoon. The show is Money Matters with Greg. I'm Greg Farrell, ceo and owner of Farrell Wealth. It's a wealth management firm locally here in Valparaiso, indiana, in the Midwestern charm of a great little town. We're licensed in 21 states. We deal with ultra high net worth and high net worth individuals and families and really on their wealth management side. We bring this podcast to you today really to just talk about. What we try to do is bring something about money into your life and how it matters to you and how it interweaves into the fabric of your lives. We have 152 episodes or so on Spotify and Apple and anywhere you pod. It's also broadcast on WVLP 103.1 FM on Thursdays here locally at one o'clock and then replayed on Saturday. So I want to thank them for the opportunity to be able to do this.
Speaker 2:I also want to bring in Tommy Grisoffi, who's a good friend here from Valpo, who's a commodities trader. We're going to talk commodities today. I really want to be able to get after what's going on, especially with spring, here in Indiana. Everyone's looking to plant start, getting ready to make sure that their crops are in and what that looks like, especially their soybean and corn that comes out of Indiana. But Tommy is an independent commodities trader and has been doing it for years, runs a business and educating people and hedging and a number of different things as far as philosophies, and I just wanted to bring him on today and just sort of add value to you guys out there and listening in the listening audience to see if Tommy can bring you some knowledge. So, tommy, I want to thank you for being here.
Speaker 3:Yeah, thanks, greg. Wonderful opportunity and beautiful sunny day. The problem with recording in an office like this is you can't control the light, but that's okay. I'm happy to be here. I'm in Nashville. I recently joined a firm named Nesvic Trading, but you know me from Valparaiso and all the years that I was a trader on the floor of the board and then, of course, a trader off the floor.
Speaker 3:99% of the markets are electronic. There is like one or two trading pits left in the world, but it doesn't matter where you live. So whether I live in Valparaiso or Nashville, as long as I bring my laptop and four screens, I'm pretty good to go. The other thing I do which ties in with Nashville is I host some shows on RFD TV, and RFD TV really focuses on rural America. There's a show called Cow Guy Clothes. When Scott the Cow Guy needs a day off, I go do that. I'll be doing that tomorrow here in Nashville, so there's another show there. Market Day Report. I also like to live stream like this Just hit play record, go live and educate people on what's going on in markets.
Speaker 3:But particularly the markets we'll probably be talking a lot about today are the commodity markets corn, beans, wheat, maybe touch on gold. Gold just hit all-time highs today. Some news just came out in the last half hour. It'll probably be old news by the time people watch this, but Trump and Putin had a meeting and it kind of went well as well as something of trying to end a war could go. So lots of things hitting the tape here in the world, not just today but in general, greg.
Speaker 2:Yeah, and that's exactly why I want to bring you on. You see things, obviously we're in the investment world and we're doing stocks, bonds, the market, everything else. But as far as exposure to commodities, you know, really it's a two or even a 3% allocation to a personal portfolio, but you're doing it. You know all in and trading. I was a Chicago Board of Options Exchange market maker for 14 years, so you know the pits and the seats and all the seat leasing or seat ownership, that it was all in existence. We all thought that the floor would never go away, but you know it went away 20 years ago. In essence, and as long as you have fiber optic cable, you can pretty much trade from anywhere now. But tell me and tell us, what are you seeing? You just mentioned gold. You just mentioned cattle earlier when we were talking. What are you seeing out there and how are farmers able to make some money this summer?
Speaker 3:Yeah, absolutely. We're five years to the date. It was five years ago yesterday that New York was officially shut down and we're still feeling that effect from COVID, whether it be money inflowing in the United States. During COVID, financially we were the best house in a bad neighborhood. Now, recently, this year, you're seeing money flow out of the United States going to maybe gold, which is a world asset. Seeing money flow out of the United States going to maybe gold, which is a world asset. You're seeing money today the German DAX hit all-time highs. You're definitely seeing money flow out of America and become a little bit more diversified.
Speaker 3:I'm sure you've had people on your show talk about crypto. Where now can trade Bitcoin at the CME Group? So there's so many things you can trade as far as my world and corn wheat beans, how are farmers going to make money? Not necessarily sure they're going to make money this year, and it just came out this morning that the USDA is releasing $10 billion to farmers here on an aid package because prices were so low last year.
Speaker 3:So what tends to happen in production agriculture is we plant too much, we grow too much, the price goes too low, supply and demand something you talk about all the time, and then, when the price goes too low, people squeal and then the government bails them out. It's not pretty, but the reverse of that would be just like you or your wife didn't appreciate six, seven dollar eggs a few weeks ago. If we didn't subsidize farmers to be a little profitable and the free markets really got nuts, then we could really have elevated higher commodity prices for longer. So the whole job of the market or the board of trade is to discover price. How are farmers going to make money this year? They may not. That is an honest answer. But if they don't make money this year, they may not. That is an honest answer. But if they don't, there tends to be programs that help them out.
Speaker 2:Yeah, are you feeling the nervousness about tariffs that we are? Obviously, we had a hiccup, more than a hiccup, it's a 10% correction in the market just recently. You know and saber rattling about Canada and Mexico, andxico and china and everything else, but are you seeing that, as far as uh, what farmers will ultimately have to pay for their seed, for their you know, for all the different things that they need their commodities to do their business? Um, you know what's the angst out there you feeling? You know, are they feeling the stress or?
Speaker 3:or a little bit let's. Let's break it down into a particular commodity cattle. Cattle prices hit all-time, all-time highs. Today, we import cattle from Canada, we import cattle from Mexico. Those are two places that we think of tariffs. We're talking Canada and Mexico immediately right Right, and Mexico immediately right Right. And our cattle herds at like the lowest since the 50s. There's a lot of things going on in cattle that have changed dynamics.
Speaker 2:Why, just curious, why is the price so high right now?
Speaker 3:Why is the price so high? Well, to continue to make beef, you have to make babies, and then you have to raise those babies and make those babies, make babies. But the price of the market went up so much that people were just selling uh what they owned, so they weren't retaining uh animals to grow the herd.
Speaker 3:The price zoomed up so high they're like a dollar in my pocket to today is better than waiting for uh 90 cents later. So they were selling them. And and then the economics also, as interest rates have went up so much. Now they've calmed down, but over the last few years operating notes for uh people in uh animal, any operating notes for anyone, not just agriculture yeah, but operating notes tripled figure.
Speaker 3:The typical farmer was borrowing money at three to four percent, no different than uh you know what you or I could really get a really low cost loan or mortgage Right. And they have what's called the operating agreements that they renew at banks. And as interest rates tripled, you know to think that, hey, I'm, I'm just a. They would think of themselves as poor ranchers. But you look out your window and you have $5 million worth of cattle right and so if you're paying 9% operating and you used to pay 3%, the only way to get that down is to sell some of those cattle, turn that commodity into money to pay down that debt. That's definitely the. You'd be surprised how much interest rates are really rocking the American agriculture.
Speaker 2:Really yeah, and they have come back. I, I mean, we're hopeful that we do get I don't know if we necessarily need it, but if we do get two cuts, at least that's what they're alluding to, you know, and the fed, the federal reserve, um, but you know, we'll see it is, it is interesting, it's it. Interest rates are certainly one of the one of the concerns with us. It's, you know, it's tariffs for sure. Uh, you know the war, uh, obviously the middle east, um, inflation and, uh, in interest rates are really what all the clients are talking about, like, what about this, what about that?
Speaker 3:you know, as far as the things you have to remind people of in 2024, we did not have a 10% pullback in the market. We had a super volatile couple days in August where we seen a VIX spike. That was incredible, but as fast as the market went down, it went back up. We've had a 10% correction. I believe this has happened over 60 some times in the last 100 years. It is extremely normal.
Speaker 3:But people probably people you work for are extremely spoiled when they hear oh yeah, my portfolio went up 26%, 27%, 28%. Lord, help them if they own NVIDIA or some high flyer that went up so much. It's not even funny. Nvidia has over hundreds and hundreds and hundreds of employees that are worth more than $20 million just from stock options they have. So the wealth that was created in the stock market. That's being tempered. And the reason, greg, that's being tempered not that I'm telling you, I'm telling our listeners is that with Elon helping President Trump cut some money, they're laying off people all over. Home prices in Washington DC are coming down.
Speaker 3:There's so much fat in the government and the government thinks you should give them a dollar and they know what's best for it, right, right.
Speaker 3:And I think if we had real CEOs who ran companies and were accountable in America. We were able to spend as much as we want and then we just turn the printing presses on and get further in the debt. They're trying to calm that down and that ties into interest rates. We're spending more right now on debt in the United States than our whole entire defense budget. We're at like $1.1 trillion in just maintaining the debt, whereas we spend about a trillion dollars on defense. So when you hear Elon cut $10 billion from the budget, it's nothing. When we're dealing with trillions here and just interest costs, we need to tone it down. As the American government quits giving away funny money to all types of things, you could see if you could create an organization and pretend you have a cause. They used to give you money, right. Well, when we take that money out of the system, it changes things, and that's probably why you're seeing people come out of the United States and go over to Germany or something like that and move a little money around.
Speaker 2:Yeah, the show's Money Matters with Greg. I'm Greg Farrell, ceo and owner of Farrell Wealth. It's a wealth management firm here in Valparaiso, and we're visiting with Tommy Grisafi, the very knowledgeable commodities trader and friend of mine. It's just a joy to have you on here and it's been fun. Our kids have grown up together, went through school together. Tommy and his family are spending a lot more time down in Nashville now that he's got a trading gig down there, which is, I'm sure, very good, but he also broadcasts nationwide in a number of different live things that many people, at least in this area and certainly all over the nation, have followed them and learned a ton, whether it be hedging techniques on their commodities and their crops or profit on the side as well, however. So we're excited to have Tommy here today. What else are you seeing? I'm seeing coffee up 80%, you know cotton down 20%. I mean some massive moves on the commodity side. Where else are you seeing like big, big?
Speaker 3:moves. Well, the number one commodity I trade for myself and for clients is corn and corn's just at a so-so level. Maybe farmers can make a little bit of money growing corn this year. Um, we grow about 15 billion bushels of corn and one-third of that corn is used for ethanol. Like you'd see, when you go to the pump it says 10 ethanol, 15. We use corn for a lot of products. If you're drinking a can of coca-cola, it came from corn syrup, right, and uh, there could be a little profit in corn.
Speaker 3:Soybeans aren't looking good. South America is competing against us hard. Brazil, argentina, all these countries can grow crops in wheat. That's interesting. What's happening as the Russia-Ukraine conflict comes to an end. Wheat prices have recently collapsed. They started going up the last few days just due to some issues over in that region. That became, I think a ship was attacked and that kind of scares people when that happens. So the whole commodity sector looks scary.
Speaker 3:You mentioned cotton, cotton. Just, there's no way someone could make money growing cotton at that level, even with a record crop, and so a lot of people in the United States depend on cotton as a crop in the Carolinas and Texas, warmer places where we can grow cotton down south and that's just not something that's profitable. So all eyes are on corn. On March 31st we'll have a USDA report and they're going to give us acres, intended acres, planted acres, intentions, intended acres, planted acres, intentions. And to me, from what I hear from people who sell seed, a lot of my clients sell corn seed. The American farmer intends to plant a lot of acres of corn. We'll see how that goes, but if they do, greg, as you know, supply and demand, they plant a bunch, we grow a bunch and we're going to have too much corn again if we did this again in six months.
Speaker 2:Yeah, it is fast. Weeds down again. If we did this again in six months. Yeah, it is fast. Wheat's down. I mean, granted, things popped up so much with the inflation numbers and the scarcity that was going on Coming off the highs. I mean wheat's down 62% from the highs, soybean oil's down 57% from the highs, corn's down 40%. I mean it's just big numbers. You're like wow and you know. Again, my concern is a lot of farmers around here in Indiana and elsewhere and certainly in Midwest, and whatnot is how they're going to do. You know it is. It's certainly going to be a challenge.
Speaker 3:What's going to happen, though? Let's talk about what they don't want to talk about. Yeah, Land prices have tripled over the last 15 years. If you own a million dollars worth of land a few years ago, you own $3 million. So you may lose $100,000, $200,000 farming in a year, but as long as land values stay high which there's no sign of them necessarily falling apart they may be softening, but people are still tripping over themselves to go out and buy land because they're not making any more of it in the United States, and every good piece of farm ground we know is starting to have a dollar store on it and a new subdivision built on it. So land prices are where the wealth comes from the American farmer. It's not so much growing the crop, it's from the as you know, warren buffett buying and holding, and one of the things that people like to buy and hold so much and keep for multiple generations is land yeah, I've also noticed most, most farmers are extremely conservative and they also save.
Speaker 2:Um. You know, I don't know if you see that too, I'm certainly. I see it. I had a client who's uh we were helping uh his dad passed away and his son was in charge of the estate and I knew his dad really, really well and you know it had him as a client for a number of years. And I wake up like in the middle of the night and the closing for the farm. He's going to sell the farm. It's nobody in the family wanted to continue as a generational thing. And the closing's like that day.
Speaker 2:And I wake up in the middle of the morning. I'm like you know what? I better, I gotta get ahold of him. I asked him like when's the closing? He's like it's 11 o'clock. I'm like it's like eight o'clock in the morning. I'm talking to him going. You know what? Can you? Have you been by the farm? Can you just go by the farm and just do me a favor? I just can you just check the silos Just see if there's stuff? There's corn in there. I'll bet there's corn. There was like 700 grand worth of corn. He was going to sell the farm with all this corn on it, he hadn't checked the silos.
Speaker 3:That does not surprise me. That's a great story.
Speaker 2:I mean just saving for a rainy day. His dad just stopped?
Speaker 3:Kind of like squirrels putting away too many nuts. Yeah, I just saving for a rainy day. Is dad just kind of like squirrels putting away too many nuts?
Speaker 2:yeah, you know just I was like so thankful that you know the family could actually profit from that and and and, not the opposite. Well, um, it's been a joy today. Uh, is there something? First of all, where does everybody get a hold of you? Where can they watch you? Where you can follow you?
Speaker 3:and I have a website with the qr code um. I haven't put much content on it in the last few weeks, but it's wwwagbullcom. Any social media Ag Bull on Instagram, facebook X, tiktok, any of those things you can get a hold of me, ag Bull. If you just Google Ag Bull, you'll find me. Of course, watch RFD TV. I'll be hosting Cow Guy occasionally and doing Market Day Report, and I'm going to start live streaming again premium content for clients and when things go nuts, like the night of the election or if something happens. We've had a lot of go nuts things. So at any point, greg, with all these cameras and stuff, I can just flip a switch and go live on these platforms. So that's always fun.
Speaker 2:If you click on Agble hit notifications, you'll see when we go live on these platforms. So that's always fun. If you click on the egg bowl hit notifications, you'll see when we go live. That's where you can find them. Yeah, the uh. The night of the election was literally like my super bowl. I mean watching futures and watch things change. I mean that's the other thing too. You've seen steel just explode. Talk about another commodity that overnight went up. I mean a number of different uh that are Chinese influenced. As far as production. They all dropped 20%. Steel went up 20%. So, yeah, it was absolutely nuts and it's good to share that with you for sure. So I just want to thank you. The show's Money Matters with Greg. You can find us on all socials, like I said, wherever you pod and WVLP 103.1 FM on Thursdays at 1 o'clock. I want to thank Tommy for being on today and keep on trucking. Good to see you See you bud.
Speaker 1:Thanks for tuning in to Money Matters with Greg. We hope you gained some valuable insights today. Remember, your financial journey is personal, but you don't have to go it alone. If you enjoyed the show, be sure to subscribe and share Until next time. Here's to making your money work for you. Securities and investment advisory services offered through LPL Financial, a registered investment advisor, member FINRA, sipc.
