Hogs: The story noted in the beef comments tries to play up how China will see a major beef demand increase in the next five years. We cannot agree with that. If you want to be bullish a meat based on the China story, it is pork, period. In the United States, it goes beef, chicken, pork and then turkey. In China, 74% of meat demand is pork. A distant second is chicken. Lastly, there is turkey and beef. Though Chinese consumers will buy more beef as incomes rise, the real surge will be in pork. Their incomes, at $5,000 to $10,000 per year, simply do not support beef.
Cattle: One bank analyst suggests Chinese beef demand, which is at 5.45 million tonnes for 2010 will rise to 7.4 in just five years. That is a massive change in demand. The story is even better when you consider that beef production has fallen for the past three years straight. That would mean imports will become a part of the story.
Rich Nelson is Director of Research at Allendale, Inc. in McHenry, IL. Allendale is registered with the CFTC and NFA and is a member of the NIBA. www.allendale-inc.com.
