The bubble Shawn Hackett sees in the livestock complex started with the multiple-year U.S. drought that peaked in 2012. The Boynton Beach, FL, market analyst is hyper bearish on the meat complex.
"The highs we make will not be exceeded for at least a decade," he says.
The drought and unattractive beef prices forced massive cattle herd liquidation that created a serious U.S. beef supply shortage in 2013. It reached an apex in 2014.
"U.S. beef supplies tumbled just as China's cattle herd suffered a major disease problem. Plus, China encountered a shortage of high-quality feed, which is why U.S. alfalfa exports to China skyrocketed. China's beef herd contracted just as demand for beef there was advancing. China turned to massive beef imports to fill the gap, which exacerbated the cattle price surge.
"A perfect storm of global meat shortages, diseases and drought have driven prices to classic market-topping highs.
"Pricy beef pushed consumers to seek lower-priced meat. But as consumers turned to pork, porcine epidemic diarrhea virus (PEDV) struck. PEDV catapulted hog prices into the stratosphere, while at the same time chicken prices were making new all-time highs," Hackett says.
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