Kub's Den

When we think about all the technologies that have made our modern lives prosperous and pleasant in the year 2023, it's the new and fancy ones that spring first to mind.

The hydraulic fracturing and horizontal drilling that keeps oil (under $70 per barrel) and its distillates affordable for us to drive wherever we want, to conduct our businesses and to visit whomever we like. Or the internet itself and all the machine learning applications that make communication with our loved ones ever more efficient. Or neon hair dye. Or any sort of medicine, from Advil to mRNA vaccines to MRI machines.

But, for my money, I think I'd pick "cheese" as the greatest-ever demonstration of human technology, although we'd have to go back many thousands of years to remember the origins of it. Think not only about the science and experimentation that goes into processing milk today, but also about the first Neolithic hunter-gatherer who bottle-fed the first orphaned wild goat, kicking off a long process of livestock domestication and breeding. After all those thousands of years of humans' hard work and genetic manipulation, we now have animals that are safe, pleasant and productive enough to keep around, and we also have cheese, this nutrient-dense, stable form of protein that is everyone's favorite item on the Christmas party charcuterie board.

In this same vein, when the Italian author Umberto Eco was asked in 1999 to identify the greatest invention of the prior millennium (the years 999 through 1999), he didn't choose internal combustion engines or even ship rudders that allowed explorers to cross oceans. In a famous essay in the New York Times, he chose: the bean. (https://www.nytimes.com/…)

It was only when European peasants in the Dark Ages started to cultivate beans (and lentils and peas) that they were able to consume an adequate, healthy amount of vegetable protein. The population went from being malnourished and sickly to being robust and healthy enough to repopulate the continent and take on serious projects that rebuilt civilization. Lentils, for instance, were originally domesticated in the Middle East, then spread through Greece to Spain and Italy and the rest of the Western world. All these places were hungry for an annual agricultural crop that could provide a peasant family sufficient protein because hunting game was prohibited by the lords of the manors.

Umberto Eco wrote: "We believe that the inventions and the discoveries that have changed our lives depend on complex machines. But the fact is, we are still here -- I mean we Europeans, but also those descendants of the Pilgrim Fathers and the Spanish conquistadors -- because of beans. Without beans, the European population would not have doubled within a few centuries, today we would not number in the hundreds of millions and some of us, including even readers of this article, would not exist. Some philosophers say that this would be better, but I am not sure everyone agrees."

Today, the bean most likely to be consumed by an American grocery shopper is, of course, a soybean. There are plenty of lentils and pinto beans grown in North Dakota, and lima beans grown in Delaware, but for the sheer number of calories contributed to the nation's food supply, no other legume crop comes close to soybeans. They're consumed as soybean oil in your salad dressing or chocolate bar or consumed indirectly as the pork or chicken in your sandwich, after first being fed to livestock as soybean meal.

Soybeans, of course, weren't part of the foundation of Western "civilization," but they were certainly the underpinning for a huge swath of historical human endeavor. Many thousands of years ago, the plant was domesticated into a crop in China, Japan and Korea, with the earliest archaeological evidence of soybean use coming from a Neolithic site in Henan province China dated between 9,000 and 7,800 years ago. By the 17th century, soybeans were being traded around Europe, but it wasn't until World War II that the U.S. agriculture industry championed this highly productive crop as a substitute for other scarce proteins, oils, and sources of nitrogen.

And that brings us to today. Is it any wonder that the price of soybeans shifts wildly from one day to the next -- up 32 cents per bushel on Monday, down 12 cents on Tuesday -- when so much depends on each humble plant, on each little bean in each filling pod? The dominant portion of world soybean production now comes from South America, and they are right in the thick of their growing season. This year, El Nino weather patterns threaten the crop with dry conditions and hot temperatures in certain crucial regions. But when a commodity market is trading based on weather forecasts, its narrative no longer takes thousands of years to develop. Instead, it's something that moves from day to day and hour by hour.

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Comments above are for educational purposes only and are not meant as specific trade recommendations. The buying and selling of grain or grain futures or options involves substantial risk isn't suitable for everyone.

Elaine Kub, CFA is the author of "Mastering the Grain Markets: How Profits Are Really Made" and can be reached at analysis@elainekub.com.

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