Eight Global Trends to Watch that Will Impact the Land Market – Week 7

Pork is Corn:

I continue to be in the camp of those that believe that the Chinese leaders have no incentive to negotiate with President Trump until after the November 2020 election. That would change if the Chinese economy experiences enough pain or Xi is “retired”.

Because China gives misinformation relative to their economy, we can only guess what economic pain they are currently suffering as a result of the trade war. Some signs indicate that the Chinese economy is seriously injured if not tanking.

One of the downsides of a central planned economy (a communist country) is that there is no real focus on quality control and safety. As a result, China’s agricultural industry has numerous problems including severely contaminated soils resulting in a contaminated food supply. It is for this reason that Chinese food companies have acquired food companies such as America’s Smithfield Foods to get a source of healthy food.

What has not received much notice is that China has a severe epidemic of diseased hogs. Although the impact reported by the Chinese government is much less, independent estimates are that at least one half of the hogs available for breeding in China have died as a result of the epidemic. Therefore, demand for American pork has almost doubled.

Any action that supports cash grain commodity prices helps form land values.

The significance of this trend is that despite the tariffs that the Chinese government has placed on American pork, they are purchasing more of our pork. Demand for pork is another form of absorbing corn produced by American farmers because corn is a major source of food for America’s hog producers.