Hot Commodities: BYND Meat Madness

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Beyond Meat Mania

Markets hit Beyond Mania over the past week. After Beyond Meat Inc BYND soared in the days following the IPO, others wanted in. Chanticleer Holdings Inc. BURG, who owns and operates a handful of burger chains with the largest being Hooters, announced they were rolling it out to roughly 50 restaurant locations. 

Should agribusinesses and farmers be worried about the rise of Beyond Meat and similar meat alternatives? While Beyond Meat may seem like a hip California startup, investors in the company include Tyson Foods, Inc. TSN and General Mills Company GM. And the pea protein isolate, the main protein ingredient in the patties, is supplied in large part by Puris, of which Cargill is an investor. Cargill is also investing in Cultured Meat - meat grown with self-reproducing animals cells, in August of 2017 investing in Memphis Meats.

While the competition in the meat space would initially seen as negative for ranchers and farmers, diversifying the general crop mix away from the main grains and oilseeds - corn, soybeans, and wheat - is of huge benefit to farmers, as farmers switching to any profitable alternative crop, such as the yellow pea used in these burgers, will reduce supply of the traditional and currently unprofitable grains and oilseeds, increasing prices all else equal. And the pea protein isolate used to make the plant-based burger patties comes from the yellow pea plant which is a nitrogen fixer, offering farmers more planting options to rotate into their crop mix. There’s little doubt that other competitors in the plant-based are working on recipes with ingredients based on other plants, further diversifying the mix. This IPO should be welcome to the agricultural industry across the board.

Grains seeing new lows as Ag Economy Barometer Plummets

The Ag Barometer neared the lowest level in three years after a Trump tweet to start the week threatening to increase tariffs on $200 billion of Chinese products from 10% to 25%.

On Monday this week, the Bloomberg Grains Subindex Total Return hit the lowest level in 42 years. U.S. farmers sure could use some positive news.

Flood and planting updates

Floods continue to cause problems across large portions of the U.S. growing belt. The planted acres for corn and soybeans across the major growing area fell further behind last year and the five year average in the May 5th release of USDA Crop Progress report.

With farmers this far behind on corn plantings, many may have no choice but to plant more soybeans, which have a quicker growing season. Additional acreage planted with soybeans could further depress already low soybean prices.

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