Commodities and Global Markets Podcast Series

Episode 11 Transcript

Macquarie Podcast Series featuring Commodities and Global Markets

Speakers: Chris Gadd, with Manuela Czinar

Recorded on 4 February 2021.





Voiceover: Welcome to the Macquarie podcast series.



Manuela: Hello, everyone. My name is Manuela Czinar and I’m a Strategist in Macquarie's Agricultural team based in Sao Paulo, Brazil. I’m delighted to welcome you to the latest episode in our Macquarie Podcast Series, featuring Commodities and Global Markets, or CGM. Today, I’m pleased to be joined by Chris Gadd, Head of Agricultural Desk Analytics. Chris, thanks for joining us today. Can you start by taking us through Macquarie’s agriculture business, your role, how you got into agriculture in a banking environment and how you joined Macquarie?



Chris: Macquarie’s agricultural business is truly globally diverse. Our business develops and delivers products to help clients mitigate risk in all regions of the world. Our aim is to deliver tools to clients that reduce the market risks they face, allowing them to focus on their core of operations. The trading and analytics team work in tandem to support the hubs of agricultural sales teams across the business. Through the last decade, we’ve built a team of industry-leading experts in the field of agriculture to support both the internal trading team, but also Macquarie's global client base. While all of the team have a passion for agriculture and a background working in physical commodities prior to joining Macquarie, we each have a specialism to add to the team. Our North American analyst spent part of his career working in the US ethanol Industry, giving him a core understanding of the underlying dynamics of that system, which helps with his analysis of those markets and building and sharing views with clients. Similar to yourself, Manuela, your background working in the Brazilian sugarcane industry has been invaluable for us understanding the nuances of that market and developing relationships and an understanding of how that market works and sets price at least. While our London analyst has a bit of a different background, she has a deep understanding of the agricultural cultural markets, but she also brings in the quantitative addition to the team with a strong knowledge of machine learning and automation. I myself, I had exposure to agriculture my entire life. I joined Macquarie nearly 10 years ago from the US trade house ADM, where I was responsible for trading the UK wheat market. Farming and agriculture are in my blood though. For many generations, my family have farmed in the same region of the UK, so while I might have left the farm, I didn’t get too far away from my roots.

What about you, Manuela? Take us through how you developed a passion for agriculture, how you joined Macquarie and how you support the team and the commodities you’re focused on?



Manuela: So, it was actually my passion for cars that got me interested in an internship about biofuels. So in my first job I had one foot in the automobile industry and the other one in agriculture. That’s how I got introduced to this world. I worked then for some years for the biofuels industry in Brazil, before moving to London to do my PhD in environmental policy. I joined Macquarie on a part-time basis during my PhD in London. And it was really this flexibility that has attracted me to Macquarie. I support trading strategy, focusing on sugar, ethanol and coffee. Most of the work is to forecast the supply and demand, and finally the price of those commodities.



Chris: You mentioned that you joined Macquarie on a part-time basis, Manuela, can you tell me a little bit more about that and the way you balanced your time at the start of your career with Macquarie?



Manuela: I never really thought I could join a bank on a part-time basis, but Macquarie was very supportive and offered me the flexibility I needed to finish my studies. The team quickly got used to the fact that I would be available only on Mondays and Wednesdays at the office and that responding times on the other days of the week would be a little longer as I would be focusing on my thesis. From the other side, I had a PhD supervisor that was also very supportive of me pursuing a career in the corporate world, not necessarily in academia. Everything worked well during those years and once I finished my PhD, I started to work full-time.

Chris, while we both started from Macquarie in London, we have both since relocated to new offices. Why did you move to Hong Kong?



Chris: Yeah, it's been a little while since I moved over here, but I’d spent around about six years with Macquarie working in the London office and then I made the move to Hong Kong in 2016. This was for both business but also for personal reasons. I think from a business perspective, China has become of increased importance for the Ag markets in the last decade. So the main aim of moving over to this region was to get a better understanding of the dynamics that drive their market. Macquarie has also been building out an Ag presence in China during this period so the two have gone hand in hand. We were fortunate to have built out our understanding of the Chinese market when the US / China trade war kicked off, as the factors from this region became a sole driver of price for periods of time, it was causing extreme volatility and just uncertainty for clients. So having that knowledge became even more valuable. We’ve been able to develop unique insights into the Chinese markets in recent years, helping deliver a new understanding to our traders, but also to our global client base. From a personal perspective, a move to Asia has always been of interest to me as I wanted to appreciate an alternate perspective on the world. It’s also allowed my wife to move closer to her family in South Korea.

Tell me about your case, Manuela. Did you have similar experiences with your move to Sao Paulo and what advantage have you found being close to the biggest sugar and coffee producers in the world?



Manuela: In my case, it was for both business and personal reasons as well. Brazil is one of the main countries supplying food and feeds to the world and we have important clients here. Not all clients in Brazil speak English so we tended to have a native Portuguese speaker in the team to share our views and to think about designing the hedging products that fitted their needs. It helps to fine tune the models when you are leaving the weather and the political discussions on your daily life. It also really helps to be in the same time zone and not to mention, to be around for a coffee with the clients. That's when COVID allows again, of course. And finally, I’m happy I moved to Brazil some months before COVID hit, so I could support and care for my mother.

As you mentioned, we are a truly global team. One advantage of being a global team is that we were well prepared for remote working when COVID hit. How has your role changed in the last 12 months as a function of COVID?



Chris: Yeah, I think COVID has been a big shock to the entire world and I think the last 12 months has been very different for everyone, but from a personal perspective, I think prior to COVID the biggest difference for me has been that I would travel significantly and regularly being away from home for two weeks of every month. Since COVID my travel schedules have reduced to basically zero, so adapting to this new form of work and without travel has been the main priority.

The tougher adaption in reality has been being able to still engage meaningfully with clients in this environment. I think while we’ve been able to replicate a lot of the presentations and normal conversational interactions with clients, it’s been far more difficult to basically have those detailed discussions with clients where you challenge views across a wide group of people. So that’s the big thing that we're still struggling with to replicate in a post COVID world. So while I suspect that post COVID we’ll host far more virtual events than before, I don’t think anything can replace that in-person debate between industry peers. There have though been some advantages from COVID with the reduction in travel. I find it a lot easier to basically tackle bigger projects, spending time and considering things deeply without that distraction of always getting on a plane at least. I think the big plus from a personal perspective from not traveling is that I have had the opportunity to spend a lot more time with my family, but I’m really not sure how my boys are going to react the next time I have to go on a big trip.



Manuela: It’s been a volatile period and obviously a big part of our work is helping clients make hedging decisions and manage their risk. You mentioned some of the challenge of the last 12 months. How do you see 2021 progressing?



Chris: I think in terms of our process, I think our approach is to provide clients with our view on price, but also provide them with a detailed explanation of the factors that we are watching, aiming to not only just give them our view, but give them sufficient information to allow them to create views independently. At its core, our role is one of knowledge sharing. We collect and redistribute information between our local contacts, our global client base, and just facilitate that sharing of information so that everyone can make hopefully better decisions. Our role becomes more important in these periods of high market volatility, as the clients’ decision-making process becomes all the more challenging. We generally see that the agriculture complex is moving to a far more volatile period. As most commodities are moving into deficit, the function of the market will be to create an incentive for the world’s producer to respond similar to what we saw in 2010 to 2014 period. So I think these periods of high and elevated prices is here to stay for the coming years, and it will be up to the producer to respond.

What about you, Manuela, how do you see 2021 panning out for the areas that you cover?



Manuela: One of the most interesting factors to watch this year will be how the Renovabio programme will develop. This is a programme that kicked in last year in Brazil, following the same format as the low carbon fuel standard of California. It sets annual targets to reduce carbon emissions of fuels by replacing fossil fuels by biofuels, such as ethanol and biodiesel. Last year was impacted by overall lower fuel consumption and the delay in some of the official systems, but now in 2021 we will be able to observe better how the price of carbon credits, here called CBIOs, will behave. And besides their renewable bio programme, we should watch how quickly oil demand will recover. This will be fundamental for the sugar and ethanol markets. Another one is when people will be allowed and feel comfortable to go back to offices and to travel again. Hospitality and offices are important factors for coffee demand. Other than that, weather will always remain important for any agricultural market in any given year.

Given that the support teams are around the world from Sydney and Bangkok, through to London, New York, and Sao Paolo, what does a typical day look like for you chasing the sun?



Chris: I think the first thing that I learned working in Asia and speaking to the world is that it’s always someone else’s morning. So no matter what the time of the day I’ve adopted good morning as my preset greeting. Being in Asia and covering the world, you have to adopt to a bit more of a flexible approach to the business day. I generally start my mornings with trading and sales calls, capturing the overlap between Asia and the US, then the normal nine to five hours of the quieter ones of my day. Then come the evening, the conference calls tsunami really kicks off again as Europe and the US come back online. Given the more unusual working hours, to maintain a healthy work-life balance I have to ensure I take breaks during the day. And I also try so that at least one week night, I don’t have conference calls at least. The other bonus is that the quieter hours of my day are when my children are awake. So given the work from home with COVID, I have the opportunity to spend time with my boys that I would have missed in a standard nine to five working arrangement. So while there are consequences and costs from this longer hours in the day, there are opportunities as well to be taken from that flexible environment at least.

Along with supporting clients, we also aid the underlying product development. We’ve developed a few interesting products in the last year, Manuela, for the Brazilian sugarcane industry. How easy is it to create these products when you’re working across different times zones and regions of the world?



Manuela: It all began at a brainstorming session with the Brazilian sales team. As the sugarcane mills hedged most of their sugar volumes, we noticed that part of their ethanol sales were going unhedged. On top of that, they did not hedge their feedstock, that’s sugar cane, so we developed two different products that use a mix of the traditional sugar and ethanol products that we already offered. I started with some calculations, discussed with the traders in London and New York, and when that looked promising, we fine tuned the details with the risk management team in London. These products gained traction in the last months as sugar prices in the local currency are close to record highs. These products fuel the need of clients to hedge both their sales and their feedstock, something that was not available at the market before.



Chris: I wanted to ask you, Manuela, about the Macquarie Foundation, as I know you’re one of the ambassadors for social finance. Can you tell people a little bit more about the Foundation and how you became involved with it?



Manuela: Sure. So, the Macquarie Group Foundation is the philanthropic arm of Macquarie Group. The Foundation provides support to hundreds of community organisations globally, through financial support, volunteering and skill sharing. Social Finance is one of the five organisations who were awarded 10 million Australian dollars each from the Foundation two years ago. Last year, the Foundation opened applications for employees to act as ambassadors for each of the awardees and I was really happy to be accepted. This organisation, Social Finance, is present in the UK, the United States, India and Israel. They work with cross-sector partners to design, launch and manage social impact bonds and career impact bonds. As ambassadors, we have been helping their US office by re-sharing their posts on social media, for example, and providing pro bono work. When we researched more about state and federal grants focusing on workforce development, we will organise a fundraising event later this year and I’m really looking forward to that.

Before we finish, Chris, for those starting out their careers, would you have any advice?



Chris: I think the biggest piece of advice that I could give is trying to find a career that you’re passionate about, because if you have that passion for what you're doing, being motivated for your daily work is so much easier. I think the other biggie at the beginning of your career is to just be a sponge and try to absorb as much information from everyone else you can do. I think it’ll give you the ability to learn from other people’s experiences, but also their mistakes. The other added natural advantages of this as well is that you build out your contact network in a natural way at least.

What about you, Manuela, any thoughts or advice for grads and interns?



Manuela: Yes, I would advise our interns and grads to build and nurture networks through their lives, to find common interests like volunteering work, sports, alumni from your school. Networking has been fundamental in my career.

Chris, I have three rapid fire questions for you to close our podcast today. Are you ready?



Chris: Ready as I’ll ever be.



Manuela: Okay. What are you watching on Netflix?



Chris: I think recently and over Christmas I had a binge-watching section for Narcos, catching up on all the series. So that was my Christmas process on Netflix.



Manuela: And who’s your biggest inspiration?



Chris: I think to be honest, my biggest inspiration would be my father. He’s had challenges in his life, he’s had disabilities, but he managed to run a farm by himself. And so that passion and drive that he’s had has been a huge inspiration for me.



Manuela: And what’s on your bucket list?



Chris: Well, hopefully with bucket lists, they change with the COVID environment, but I’d say the biggest bucket list would be able to get back travelling again and start to see more regions of the world and take my boys to some of the interesting places that I’ve been able to travel, through South America and through the US at least.



Manuela: That was great, Chris. Thanks for joining me today. For those listening, thank you for joining today’s podcast. I hope it has provided some inspiration as you consider your own careers. We look forward to welcoming you to the next episode in the podcast series next month.



Voiceover: Thank you for listening to the Macquarie Podcast Series. For more information, visit To find out where a career at Macquarie might take you, please visit


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