Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Follow the Money - Sell Google Buy Hogs

Commodities / Livestock Jun 06, 2013 - 04:18 PM GMT

By: Ned_W_Schmidt

Commodities

Does management of Shuanghui International Holdings understand the future better than most? Or maybe, the Street and its army of overpaid analysts and gurus never understand the future. Whatever the actual situation, the best course for investors may be to simply follow the money.


For those that missed it because their news media was cluttered with trivial reports on tech stocks and silly glasses, Shuanghui of China is buying Smithfield Foods(SFD) for almost $4.8 billion. They are not buying GOOG, ZNGA, FB, LNKD, or any of the other nonsense being promoted by the Street. SFD raises hogs and produces pork. What might the Street be missing? Could it be that one can eat a hog while one cannot eat a tweet?

Little wonder the Chinese economy is performing far better than the U.S. and the EU. In that nation entrepreneurs like Wan Long of Shuanghui are investing in real assets that will help feed 1.3+ billion people in the decades ahead. In the U.S., billions of dollars are being squandered on trivia that will send silly messages and pictures on a phone. China will eat while the U.S. will have google glasses.

Animal protein from hogs, chickens, and beef are an essential part of the human diet. As consumer incomes rise, as they are in China and the developing nations, the demand for animal protein rises faster. How China satisfies that demand is an important question, the answer to which may be quite rewarding to investors.

As the charts on the previous page show, the price of both broilers, table chicken, and beef have moved to new 90-week highs. In the chart to the right, U.S. hog prices are near to such a high. Clearly, the markets for animal proteins have tightened. Given the long-term shortage of Agri-Grains, higher animal protein prices, in an irregular fashion naturally, over time should be expected.

Shuanghui clearly understands the fundamentals of feeding China, while most Western economists and investment gurus do not. To produce a pound of pork requires about six(6) pounds of grain. 700 gallons of water are consumed in the production of a pound of pork. So, which is easier, importing six pounds of grain, 700 gallons of water, or one(1) pound of pork? On which would you prefer to pay the postage?

Shuanghui with the Smithfield purchase is acquiring a global conduit of pork production, breeding knowledge, a legacy of safe pork, and brand names that will facilitate sales of pork in China. So, we ask a very simple question. In which should one should you put money, an entity like SFD that cannot be replicated at any price today or silly techno-glasses? If you arrive at the right answer for that question, then AgriMoney should be the next stop in your investment search.

By Ned W Schmidt CFA, CEBS

AGRI-FOOD THOUGHTS is from Ned W. Schmidt,CFA,CEBS, publisher of The Agri-Food Value View, a monthly exploration of the Agri-Food grand cycle being created by China, India, and Eco-energy. To contract Ned or to learn more, use this link: www.agrifoodvalueview.com.

Copyright © 2012 Ned W. Schmidt - All Rights Reserved

Ned W Schmidt Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in