there remains too much that is unknown regarding China’s coronavirus, especially as it pertains to potential duration, number of people who have contracted it, and the potential mortality rate. one key part of my analysis, as related to the commodity markets, is to gauge the most important commodities to watch: as they could be the “canaries in the coal-mine” for market sentiment. this is especially important given that china continues to extend their lunar new year holiday & with it the closure of their key equity markets.
The video above is especially interesting for potential impacts on protein demand with the author saying that he is going to pass on buying meat for now (at ~ 4:55 into the video). This video author is white/non-Asian & says in the video that he is stocking-up with groceries for several weeks, hence the large suitcases being taken. Does this forebode a consumption shift away from meat due to the coronavirus–whether conscious or sub-conscious? This is just one video so it is not responsible to suggest this at this time: but it is enough to raise the question in my view.
I have been suggesting to clients & subscribers before finding this video that Copper, Crude Oil, and Livestock Markets are likely “canaries”, as is the US Dollar-Offshore Chinese Yuan Currency Exchange Rate. After seeing this video, I have more confidence in this analysis being accurate, and that the three keys mentioned above–DURATION, # OF CASES/HOW WIDESPREAD, MORTALITY RATE–are likely to be key determinants of the Protein markets price-action going forward in particular; in other words, the the trend of the hog & cattle markets are likely to drive the trend of the grain & soy markets as I see it at this time. Indeed, in the Chinese meat price charts below, we’re starting to see some additional weakness; we need to watch for this to potentially become a trend, as this will be supporting evidence of the video author by-passing meat at the grocery store. I’ll continue to delve deeper into this analysis, so be sure to sign-up for a subscription to my newsletter: just go to the FREE TRIAL & SUBSCRIPTION Tab and fill-in the necessary information. –Mike Zuzolo
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