Highlights From The Inside Commodities Conference

I have more reasons than usual to be cheerful this week.  Not only is Energy Burrito celebrating the milestone of reaching 300 posts, but I have also had the glorious experience of attending and speaking at the Inside Commodities conference in Chicago. To complete the treble, I have got to meet one of my heroes, Dennis Gartman.

The conference itself was an incredible event, and I gleaned a huge amount of information (and am still in the process of processing it). But as a starting point, I have written up my notes and am sharing some of the more coherent nuggets of wisdom ascertained:

–Quote of the day came from Ashmead Pringle –  ‘Food is the new oil, land is the new gold’

–The average person in China consumes 3 cups of coffee per year. The average American….240

–Commodities have kept pace with inflation since 1800, with hard commodities such as oil and metals performing much better than softs (i.e., corn and wheat) – the conclusion of research by keynote speaker Geert Rouwenhorst, Yale Professor of Finance

‘What keeps me awake at night? Nigeria’ – Dennis Gartman, referring to the threat of sabotage by the militant group MEND in the oil-rich nation

–All the gold mined throughout history would only fill three swimming pools

–Europe is the largest consumer of cocoa – the debt crisis isn’t cutting into their appetite for candy bars

‘Gold is nothing but another currency, which sees wealth  flow into it in times of fear’ – Dennis Gartman

These are some key points from a panel of Paul DietrichDr William Tierney, and David Burkart discussing China:

–China’s new ten year plan starts in 2013, and includes moving 400 million people from the countryside to the cities…40 million a year. Ahead of this plan, however, commodities are in a holding pattern, also awaiting the change in leadership in the coming months

‘It is a perfect time to take advantage of this down time in China. We are going to see a serious boom‘ – Paul Dietrich

–Two of the largest challenges that China faces going forward are an increasing need for 1) water, and 2) protein

–While its rural areas persist in trying to grow rice and other highly water-intensive crops, China instead needs to focus on other forms of agriculture which are better suited to its environment, which can then be exported for profit (a comparison was drawn with California, and how it has adapted to have a successful wine industry)

–But given the ingrained mindset for national security, China’s rural population is unwilling to adapt and benefit from changing to more suitable forms of agriculture. It is also capped by the relatively small amount of arable land it has – estimated at 7%. At the same turn, water scarcity will continue to become an ever greater issue

–The old adage of the ‘eat your vegetables’ mindset has been morphed by China to that of ‘eat your protein’, as the country looks to the West and sees height and physical strength as a result of protein consumption. This could have severe repercussions, which are outlined in ‘The China Study’ by T Colin Campbell

–China is pursuing nuclear generation and solar power, but more out of a desire to eliminate pollution to increase life expectancy rather than out of a desire to be perceived as more environmentally responsible

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I was fortunate to acquire a number of  other tidbits, which I intend to dig into. These range from the recent turnaround in steel prices to the high level of anticipation surrounding LME week in London next week. But nothing left me feeling more fortunate than the opportunity to hear Dennis Gartman speak (here is more on what he talked about), let alone meet the man (do I, err, look a little starstruck?!):