RealAg LIVE! with Brett Stuart on what makes a commodity super-cycle

Episodes:

A current issue on a lot of people’s minds are the commodity markets, and unbelievable old crop and futures canola prices are sure a surprise for many. But what exactly is a commodity super-cycle, what’s behind it, and how long will it last?

For this RealAg LIVE! session, Shaun Haney chats with Brett Stuart of Global AgriTrends on you guessed it: global agri-trends!

RealAg LIVE! streams every weekday at 3 pm E on Youtube, Facebook, and Twitter!

SUMMARY

  • What IS a commodity super-cycle?
  • It’s somewhat of a perfect storm — happens when multiple factors happen at once
  • Far beyond supply and demand, booming customers, money and inflation, and interest rates…
  • Are commodity runs different than the equity side? There’s a lot more to commodity markets than equity markets in some ways
  • Commodities became a “cheap” buy
  • Is China the biggest factor?
  • You need oxygen, fuel, and a spark — China has been that spark, led by African swine fever
  • 2019 we lost 1/4 of the swine herd
  • And then China found out they were out of grain, and we were off to the races
  • Ending stocks are a state secret in China, you don’t ask about them
  • AFS is hard to kill, spreads like fire, food waste is fed to pigs — and likely re-infecting the hog herd. This is 2019, they banned “swill feeding”
  • They begin rebuilding the herd, prices are great for hogs, and then they have to feed them something so…
  • 85 per cent of the herd was small, now they’re commercial scale and using commercial feed
  • 30 million tonnes was food waste….that had to be replaced. That’s 1.2 billion bushels of corn!
  • 6 million acres of U.S. corn!
  • He thinks it even caught China off-guard and that’s why they had to step in and buy high
  • There was a huge amount of flooding in a rice and hog zone in 2019
  • The signal is grow more! It’s a year over year “fix” for high prices
  • In livestock markets (cattle) it’s a 3-year cycle
  • It will come down, but there’s a major shift outside of the actual market, i.e. the stock market.
  • Money supply — we just grew the supply 26 per cent. Inflation!
  • How long will it last? Look longer down the calendar….
  • Soybean shortage?
  • Should we be worried about further antagonizing the Chinese government further?
  • The country drives the corn and protein markets right now
  • Can we wean ourselves off China? Reduce the risk of the dependence?
  • Ag reform in India impact on global markets? Probably not. India is too closed off. Not a huge importer or exporter of anything. And that’s too bad. Because their people could benefit from the import of food.
  • There’s fear that those farmers are put out of work and then what will they do?
  • China will only import so much pork; they don’t like to position themselves to be dependent on only one source
  • Land, acres, water — China can’t be self-sufficient on food
  • Inflation is here to stay. And only one good solution — and that’s to raise interest rates, and that’s scary for the economy
  • Veg oil complex? Still in the sugar rush

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