The new (dis)order in today’s markets could favor livestock profitability

first_imgShare Facebook Twitter Google + LinkedIn Pinterest By Abbie Burnett, production communications specialist for Certified Angus BeefIn a third of the world’s economies today banks charge customers to keep money in savings. This and other disincentives to save has brought world economic debt to record levels, and the U.S. at $23 trillion holds the largest share of the $243 trillion total.“Economic and political order has become disorder,” said Dan Basse, AgResource president, in market analysis comments at the 2019 Feeding Quality Forum in Amarillo, Texas.The pressure is on to put money to work in those economies, even to the point of devaluing the money,“In agriculture, everybody is dropping their currencies so they have a competitive edge in producing more supply,” Basse said. “This is what’s giving us a supply bear market in the grains.”“It’s really why interest rates cannot rise. So, we are kind of locked into this environment of debt and low growth.”Enter the Chinese economy. Growth there and in India will see median annual incomes of at least $20,000 rising to 150 million people.“That’s why this trade war, if you will, or trade debate is so centered on China —because they have the money to spend over the next six to eight years,” he said.In the next four to seven years, China will become the leading economy in the world and at some point after that, India will become second largest. The longer this trade war goes on, the more worldwide structural production habits change, Basse said.“Someone is going to produce what we don’t, and sell to China,” he said.In the midst of these trade negotiations, China is dealing with a major blow to its agricultural industry. African swine fever is reducing the world’s largest hog herd, which he said will decline from more than 600 million to 340 million head by year’s end.“[China] is of course stepping up their beef imports,” he said. “They are so hungry that they’re now turning to Africa to see if they can bring in some beef to fill their needs.”Basse said if we had a Chinese free trade agreement today, “We couldn’t keep beef and pork on the shelf.”But still, overall U.S. beef export commitments are good.“There’s a solid demand for our beef, both in terms of the domestic market and the export market,” he said. “We think USDA is understating U.S. beef trade, so there’s a real argument of a demand bull market that’s developing as U.S. cattle prices tighten.”The record-high domestic beef quality grades now are partly a result of U.S. consumer demand for better beef, and one reason premium-quality branding has done well, Basse said.“Everybody is looking for that higher quality cut,” he said.Record strong demand now and for “many years to come” suggests a clear advantage for producers of that higher quality.“I think it’s a good investment,” Basse said. “Consumers will reward you with bigger demand going down the road.”He doesn’t have the same optimism for grain farmers. With fewer porcine mouths to feed in China, there’s less need for soybeans and corn. African swine fever in China amounts to a loss of 20 million metric tons per year, compared to the total world meat trade of 7 million metric tons. As bullish as that is for meat, it’s bearish for world soybean demand, which leads to an extra billion bushels a year likely remaining in the United States.Basse’s not worried about having enough corn, for now. An adequate supply going into winter should mean a stable spread of $25 or $26 per hundredweight between feeder cattle and fed cattle, but that may widen to the $35 range in early 2020.“I don’t have a long-term bullish outlook for the feed producer or the corn-soybean farmer,” he said. “But I would take coverage if you see a real dilemma in South American weather.”Climate change and the warming northern oceans have led to more “angular” jet stream patterns so that weather can settle into one region, sticking around longer than usual.If the Southern Hemisphere growing season is disrupted by “stuck” weather patterns, China would be forced to buy from the U.S., despite the tariffs, creating an inflammatory market, Basse said.U.S. weather bears watching as well, because delayed planting put acres at risk of an early frost.“So you want to be protected maybe at current prices,” he said. “But I really have difficulty getting corn too much above $4.20 a bushel relative to spot futures in Chicago.”If weather holds steady, a year from now, corn could be trading at $3 or below, he said.For cattle, Basse said the cash bottom could be in and fed supplies will tighten into March. The market will turn bullish, normal weather advancing prices to the $122 to $128 per hundredweight range for the 2020 first quarter.“I want the cattlemen and the grain farmers to think of profit margins down the road,” Basse said. “Always be protective of them because our real goal in this game is to stay in business, expand when our neighbors aren’t and to look for opportunities.”last_img read more

‘Nagpur can be development centre’

first_imgNAGPUR: Nagpur, with its mix of infrastructure and culture, has the potential to become the centre of development of the country, President Ram Nath Kovind said on Friday. The President, who was on a day-long tour of Nagpur on Friday, visited Deekshabhoomi, where Dr. B.R. Ambedkar converted to Buddhism with lakhs of his followers in 1956. Mr. Kovind also inaugurated the Suresh Bhat Natya Sabhagrah and a vipassana meditation centre at the Dragon Palace Temple complex in Kamptee area on the outskirts of Nagpur. This was his first visit to Maharashtra after assuming the office of President. “Maharashtra is the karmabhoomi of many revolutionaries, social reformers, and saints. The list of great social and political leaders produced by the State is a long one. Maharashtra was one of the main centres of the freedom struggle. Many important chapters of the freedom movement, including the Quit India movement of 1942, were written in Maharashtra. Mahatma Gandhi regarded Gopal Krishna Gokhale as his guru, and made Wardha his workplace,” Mr. Kovind said at the inauguration of the Suresh Bhat Natya Sabhagrah. He added, “Maharashtra is not only a hub of industry and business of the country, but that of its culture and art as well. Mumbai is described as the economic capital of India. By linking its heritage of education and culture with trade and technology, Maharashtra is giving strength to the entire country in the 21st century. In the quest for development and economic change, we have to take care to keep our cultural moorings intact. In this context, Maharashtra is setting an example for the nation.” He appreciated “the rapid development of modern infrastructure in Nagpur”. “The Zero Mile Nagpur, traditionally regarded the geographical centre of the country, has the potential to become the centre of development of India as well,” the President said. Earlier, at the inauguration of the vipassana centre, Mr. Kovind called vipassana an effective way to cleanse our mind and body. He said the ideals of Buddhist philosophy were reflected in the Constitution.last_img read more