I hope everyone had a safe and happy Easter weekend!
My family and I certainly did. My birthday also coincided with the holiday, and all I asked for was to get out of the house for a little while.
So we put away the screens to which we’ve all become glued and went outside to enjoy some gorgeous weather.
We grilled out, took some long walks, and kicked the soccer ball around.
My 6-year old daughter got in some quality wiffle ball batting practice and hit bombs.
I took two naps.
And while we’d normally go to church on Sunday morning, the lockdown forced us to stream the service on Zoom. What that meant of course was that my wife watched the service, I sat on the side and couldn’t see the screen, and my daughter left to get a snack, never to return.
I did manage to hear the homily, though, which discussed building a sense of community. It’s a fitting topic, too, as I’m sure cabin fever is causing everyone’s patience to wear thin at this point.
“The secret”, the pastor said, “is to break bread with as many people as you can as often as you can”. He then told the story of “feeding the five thousand”, hinting that crowds that big aren’t necessary to get the job done.
Somewhat ironically, at the same time I was putting a lamb roast in the oven for our crowd of three, I got an alert on my phone.
The headline read: “Top Pork Producer Shuts Key Plant and Warns of Meat Shortfall“.
And as soon as I saw it, I knew it would turn out to be true. Because the same masses who have been hoarding paper towels and toilet paper now had reason to worry about food.
The effects of COVID-19 on our meat processing capacity won’t be limited to that one pork plant either. JBS USA has closed a Souderton, Pa., beef plant until at least Thursday.
Cargill and Tyson Foods (NYSE: TSN) have also closed plants in Pennsylvania and Iowa.
As much as I’d like to leg into Tyson here, meat prices don’t exactly look good at the moment, as evidenced by lean hogs in the chart below.
Plus, restaurant demand has plummeted compared to normal. There will be a better time.
But this exercise did get me digging into the global food supply chain, and I was a little surprised at what I found.
As global trade has ground to a halt due to COVID-19, it has caused a handful of countries to protect vital exports.
In particular, Vietnam moved to halt rice exports while it assessed domestic supplies. Prices have since risen.
And just a day or two after that announcement, Russia and Kazakhstan made clear they are looking to limit wheat exports.
And much like with rice, the price has done little but rise of late.
Moreover, there’s not really a direct play on rice. But there is one on wheat, and it’s the Teucrium Wheat Fund (NYSEArca: WEAT).
Even better, it appears to mimic the wheat market pretty closely.
So let’s jump in. There’s likely some downside from here given its recent run-up, but deploying 25% of any intended stake at market prices here seems reasonable. Await my instructions on the remainder.
There will be knock-on effects here too, as the increase in wheat prices will jack up the cost of every pantry staple from baked goods to bread – even the price of pasta in Italy.
That resulting food inflation will alter consumption patterns. Global trade patters will shift. Currencies will be affected…and not in a good way.
Because if you think about it, the world until recently has been one big community.
But all of a sudden, we have literally stopped breaking bread with one another.
This time around, I’m afraid it may genuinely take someone capable of moving Heaven and Earth to rebuild relationships.
Otherwise, it’s not exactly clear who’s going to “feed the 7.8 billion”.