As America stuff itself on turkey, let’s consider the rest of the agricultural commodity complex.
Chinese imports of soybeans are ramping up bigtime. Shipments may even eclipse this year’s record, thanks to Beijing’s pledge to keep shoring up local prices and a pick-up in soymeal demand.
In fact, China has bought 15.84 million metric tonnes of new U.S. soy, nearly twice as much as the 8.28 million tonnes booked by this point in 2008, according to the U.S. Department of Agriculture.
What’s more, 3.603 million tonnes of U.S. soy has been booked for “unknown destinations.” As much as 70% of that may be for China as well, according to traders.
According to reports, traders and analysts expect China’s imports to rise to more than 3.5 million tonnes, or even 4 million tonnes, each month from November to February.
Other agricultural commodities also have done well recently. Corn snapped a four-day losing streak on Monday and wheat was the biggest gainer on Monday on a percentage basis, despite many traders saying there is a glut of wheat on the market.
My question: If there’s a glut of wheat, why is it rising in price? I’ll tell you why: Many analysts believe Canadian and US plantings will fall this year, while newly-sown winter wheat in much of Russia and Ukraine has been dogged by drought. So, the world wheat market is very aware of risks to world production as it looks forward to the 2010 crop.
Talkin’ Turkey — China and India Want to Eat Meat
Now, back to talkin’ turkey. People in India, China and other emerging markets eat a lot less meat — including turkey — than big, fat Americans. But they are catching up. And that means not only more meat production, but also more grain production.
For every pound of beef produced, 10 pounds of grain are required. For a pound of pork, four pounds of grain are required, and for one pound of poultry (chicken or turkey), two pounds of grains are required.
I don’t have a crystal ball, but scientists say that if current trends continue and if Chinese and Indian meat consumption rise to U.S. levels, global caloric intake could double by 2050. And that would be VERY bullish for grain prices.
Now, let’s look at two agriculture charts. We’ll start with a weekly chart of the Market Vectors Agribusiness ETF (MOO: 45.448 +0.378 +0.84%) …
Then we’ll look at the PowerShares DB Commdity Trust Agriculture Fund (DBA: 24.488 +0.038 +0.16%) …
These both look pretty bullish to me.
Big Man Japan
Oh, one final note: Japanese lawmakers have set a maximum waist size for anyone age 40 and older: 85 centimeters (33.5 inches) for men and 90 centimeters (35.4 inches) for women.
Those who fail to meet the waistline requirement must undergo counseling. This is all done through company health insurance programs. If companies do not reduce the number of overweight employees by 10 percent by 2012 and 25 percent by 2015, they could be required to pay more money into a health care program for the elderly. An estimated 56 million Japanese will have their waists measured this year.
Now there is talk of passing some version of this program in the U.S. That’ts just something to keep in mind as you gobble that third helping of turkey, gravy and stuffing.
Happy Thanksgiving!
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