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Mar 10 • 7 tweets • 3 min read
1. Food price inflation, availability, access, and security much in the news today. Hard to see that lessening for some time now. In that context, here is a list of five classic books on commodities that I regard as essential reading.
2. First up is Tom Hieronymus' book "Economics of Futures Trading." Still the best book ever written on commodity futures even tho last edition was in 1977. Now available in ebook format amazon.com/Economics-Futu…
3. Next up is Dan Morgan's classic book "Merchants of Grain." Crucial historical perspective on the grain trade and how it developed starting in the 19th century. Worth reading just for the story of the Great Russian Grain Robbery. amazon.com/Merchants-Grai…
4. Third selection is Brian Kingsman's book "Commodity Conversations." A true slim classic. If you have a friend who wants a quick and accessible source on commodity markets and trading, this is it. An outstanding read from someone long in the industry. amazon.com/Commodity-Conv…
5. Fourth selection is another book by Brian Kingsman "Out of the Shadows: The New Merchants of Grain." Not just an update of Dan Morgan's classic. Thorough overview of the modern grain trading industry. amazon.com/Out-Shadows-Ne…
6. Last but definitely not least is @JavierBlas and Jack Farchey's recent book "World for Sale." If you want to know why commodity sanctions "leak" then read this book. Hugely entertaining too. amazon.com/Out-Shadows-Ne…
@JavierBlas 7. Correction: The author for two of the books is Jonathan Kingsman not Brian Kingsman. I have the hardest time keeping these two names straight! Brian wrote a lot of commodity forecasting papers back in the day that I read. Crossed synapse seems permanent :)

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Scott Irwin Profile picture
Mar 10
1. Seeing more and more calls to waive RFS mandates as a way to address food supply problems. Turns out we already conducted a huge experiment to see how this would work out. It was called small refinery exemptions (SREs). Collectively, the SREs functioned as an RFS waiver.
2. The main target of the calls to waive RFS mandates is ethanol. New front in the #RFSwars. I only need one chart to prove that waiving RFS conventional ethanol mandate will not reduce ethanol use more than a minimal amount.
3. Here is the chart. Monthly implied blend rate for ethanol in US gasoline. SREs waived billions of gallons of ethanol mandate between 2017-2020, but notice literally no change in the trajectory of the ethanol blend rate. Hmmm. Image
Read 8 tweets
Scott Irwin Profile picture
Mar 9
1. Converting Russian crop production into million bushels for 21/22:

Winter wheat: 1,918
Spring wheat: 845.1
Sunflower seed: 1,146.4
Barley: 803.8
Corn: 598.4

Total for 5 crops: 5,311.7

By comparison, Ukraine production for same 5 crops is about 3,700 million bushels
2. Where Russian wheat is produced. Why the Ukrainian and Russian production area is referred to collectively as the "Black Sea production area". Image
3. Exports from domestic Russian production are largest for three crops, as projected for 2021/22:

Wheat: 1,175 million bushels
Barley: 206.7 million bushels
Corn: 177.2 million bushels

So, wheat is the big story in Russian grain exports, which is well known by now.
Read 9 tweets
Scott Irwin Profile picture
Mar 2
1. I've been thinking about this all day and I came to the conclusion that its time for the Biden Admin to consider opening up the CRP for cropping in 2022. Emergency situations sometime require extraordinary responses. Let me explain my logic. Image
2. Starting point is obviously what you think is going to happen in the Ukrainian War. I only see one way that the war ends quickly and without massive and continuing disruption of Black Sea agricultural production and exports. That one way is a coup against Putin.
3. A coup against Putin is possible but the odds seem pretty small to me. So I don't see Putin stopping prosecution of the war. Nor do I see the Ukrainians quitting anytime soon, even if they lose Kyiv. Obviously I am not a military analyst. Just the way I see it.
Read 14 tweets
Scott Irwin Profile picture
Dec 31, 2021
1. Weekend Reading: The Russians are coming. The Russians are coming. The Ru...Oh wait. I meant The Annual Index Rebalancing is coming. The Annual Index Rebalancing is coming. (Have to be a certain age to get the joke)
2. Now that I have your attention, going to talk about a brand new article in JCOMM about the price impact of index rebalancing in commodity futures markets. Every January this is a major topic of conversation in the markets. sciencedirect.com/science/articl…
3. Background: There is still a lot of money invested in commodity futures markets that is tied to indexes, like the GSCI. Massive passives and all that. Once a year the GSCI revises the weights applied to the commodity futures included in the index.
Read 11 tweets
Scott Irwin Profile picture
Dec 30, 2021
1. I always enjoy being interviewed by my old friend Stu Ellis. He asked a great question here and I had a chance to revisit one my big themes on twitter for 2021: what is the tolerance of the voting public for costly carbon mitigation policies?
2. To recap, my main point is that the climate change lobby has been doing their movement a disservice by not playing it straight with the broad public about the cost of carbon mitigation polices to address climate warming.
3. You can dismiss me because I am certainly not an expert on climate change in general nor on all the different policy options to address it. But what I do know as an economist I think is important: there ain't no free lunches.
Read 5 tweets
Scott Irwin Profile picture
Dec 23, 2021
1. Weekend Reading (Special Holiday Edition): "When Does USDA Information Have the Most Impact on Crop and Livestock Markets?" Article published in the Journal of Commodity Markets in 2021. sciencedirect.com/science/articl…
2. Back story on this article centers on the argument by some that the rise of "big data" private sector companies made USDA reports redundant. Putting aside the obvious private incentives of people in big data firms making this argument, it is worth taking seriously.
3. Then Chief Economist of the USDA Rob Johansson asked a group of us to undertake a rigorous investigation of the idea that USDA crop and livestock reports had become redundant in the new "big data" era. We decided to do three different types of tests.
Read 12 tweets

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