🔴 African Swine Fever's Effects on Meat Markets & How to Play It (w/ Shawn Hackett)

TL;DR

African Swine Fever has caused a significant decline in the global pork industry, leading to shortages in meat protein supply and skyrocketing prices in China. The disease has also affected the supply and demand dynamics for chicken and beef.

Transcript

JAKE MERL: Welcome to Trade Ideas. I'm Jake Merl, sitting down with Shawn Hackett, President of Hackett Financial Advisors. Shawn, it's great to have you back on the show. SHAWN HACKETT: It's really good to be back. We said we'd talk about African swine fever again, and here we are. JAKE MERL: African swine fever, you've been covering this topic fo... Read More

Key Insights

• 🥺 African Swine Fever has caused a significant decline in pork production in China and other Asian countries, leading to shortages in the global meat protein supply chain.
• 🍗 The psychological impact of the disease has affected consumer behavior, with a shift towards "clean" meats like chicken and beef.
• 🍖 China's demand for meat protein has increased, resulting in skyrocketing pork prices and a need to import other meat proteins to fill the gap.
• 🍖 Opportunities exist in the meat protein market, particularly in stocks like Seaboard Corporation and Wilmar International, which are expected to benefit from the rebound of pork prices and the increased demand for alternative meat proteins.

Questions & Answers

Q: What is African Swine Fever and how has it impacted the global pork industry?

African Swine Fever is a highly contagious disease that has spread throughout China and other Asian countries, leading to a significant decline in pork production. The disease causes sudden death in pigs within 10 days. As a result, China has seen a 35% decrease in hog production, causing shortages in the global meat protein supply chain.

Q: Is the problem of African Swine Fever getting worse or better?

The problem has worsened since the last discussion on the topic. The disease has spread to all major Asian countries, particularly Vietnam, which is a significant pork consumer. China, on the other hand, has not seen any improvement, and the country is still trying to come to terms with the magnitude of the problem.

Q: How has African Swine Fever affected the supply and demand dynamics for chicken and beef?

African Swine Fever has not only impacted the price of pork but has also affected the supply and demand dynamics for other meat proteins. Consumers are opting for "clean" meats like chicken and beef due to the psychological impact of the disease. Additionally, there is not enough pork in the world for China to import, leading to a need for alternative meat proteins to fill the gap in the supply chain.

Q: How have trades in meat protein companies performed over the past 6 to 12 months?

Long positions in companies like JBS and Pilgrim's Pride have performed well, with JBS more than tripling in value since late 2018. Pilgrim's Pride has seen a 40% increase in stock price since April. However, Australian Agricultural Company has not seen significant movement due to ongoing drought conditions.

Summary & Key Takeaways

• African Swine Fever is a highly contagious disease that causes sudden death in pigs within 10 days. It has spread throughout China and other Asian countries, resulting in a 35% decrease in China's hog production.

• The meat protein global supply chain is facing a significant hole due to the decline in pork production. This has led to skyrocketing pork prices in China and a shift in consumer demand towards chicken and beef.

• The psychological impact of the disease has also affected consumer behavior, with many people opting for "clean" meats like chicken and beef instead of pork.