Ag Analysis Report 3/12/20 - How Much Lower Will Beef Prices Go???
President Donald Trump wants a payroll tax cut that would last at least through the election to give consumer some relief from an economy that is definitely shrinking. Trump wants to ensure hourly workers have some type of safety net if they get infected from the virus. Trump also wants to provide a $50 billion relief package to small business owners affected by the virus. But I’m convinced this won’t be enough. I’m convinced a recession is upon us as we speak.
Many restaurants are also likely to be hit by a drop in patrons as more consumers are stocking up on groceries and having food delivered. In 2005, when the avian-flu pandemic occurred, the Congressional Budget Office estimated that spending on food services, arts and accommodations would temporarily decline by about 80% during a major pandemic.
“America’s restaurant and food-service industry is home to nearly 16 million trained and skilled employees, and the industry is a key economic driver in communities,” said Mollie O’Dell, a spokeswoman for the National Restaurant Association, a Washington D.C.-based industry organization.
About a year ago, U.S. federal agents seized 1 million pounds of pork smuggled from China to a port in New Jersey amid fears the meat could contain traces of the African swine fever virus that has ravaged the Asian country’s hog herd. China’s hog herd -- the biggest in the world -- has plummeted as farmers cull inflicted animals. That, in turn, led to a global rally in cattle prices, as traders anticipated surging Chinese demand for beef. But then COVID-19 hit and is currently taking the world by storm.
Hundreds of conferences, concerts and other events worldwide have been cancelled, postponed or moving to the internet due to COVID-19. Jazz players Rudy Gobert and Emmanuel Mudiay who had a game last night were listed on the injury reserve due to illness…both tested positive for COVID-19. The NBA immediately cancelled the remainder of the season. Do you know how many jobs will be affected.
Take the Milwaukee Bucks for example. The Bucks were scheduled to host the Boston Celtics on Thursday, the Golden State Warriors on Saturday and the Miami Heat on Monday, with all three games expected to draw sell-out crowds of more than 18,000 fans. Now downtown Milwaukee businesses will be drastically hit and will probably be force to lay off people.
So what does al this have to do with beef prices? US beef demand rises and falls with the economy. When consumers feel richer, they buy more beef; when they’re feeling squeezed, they seek cheaper alternatives. I’m not rich or poor and I and even while the economy was humming along, I would gravitate to chicken just because it was 50-75% cheaper than beef. However, history tends to repeat itself. When the Great Recession, per capita US beef consumption dropped 10 percent between 2007 and 2011. I think within the next 12 months thing will be worst than the Great Recession.
So where are beef prices headed, lets go to the charts?
Monthly Chart (Curve Timeframe) - the monthly demand is at $99 and monthly supply is at $138.
Weekly Chart (Trend Timeframe) – the trend is sideways with downside momentum
Daily Chart (Entry) – the chart suggests to go long at the daily demand at $97.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
Posted via Steemleo
