Goldman Sachs says the only other commodity ‘looking as precarious as oil’ is livestock.

The head of commodities research at Goldman Sachs believes the two big commodity stories looking ahead to 2021 and beyond will concern oil and livestock. The forecast comes at a time when the coronavirus pandemic has prompted many countries across the globe to effectively shut down. It has created an unprecedented demand shock in energy markets, with U.S. oil prices tumbling into negative territory for the first time ever last month. Both major oil benchmarks have registered modest gains in recent weeks. However, Brent crude futures and U.S. West Texas Intermediate futures are still down more than 50% on the start of 2020. The coronavirus outbreak has also wreaked havoc in the food industry, with farmers now facing a pronounced market imbalance. As a result, Currie said that he believes the only other commodity market “looking as precarious as oil” was livestock. “They both share something in common: You do damage to the supply, it takes a while to bring it back online again,” he said. “We had a problem with livestock going into this … We now have a very serious problem,” Currie added. Meanwhile, an uptick of Covid-19 cases in meat processing plants has led to some closures and a slowdown in production. As a result, there are growing concerns about whether the industry can meet demand for pork, beef and chicken. At the same time, food banks have reported massive shortages. Feeding America, the largest network of food banks in the U.S., has warned that the number of “food insecure children” in the world’s largest economy could hit 18 million as a result of the Covid-19 pandemic. Analysts at Bank of America Securities said in a research note published late last month that livestock farmers in the U.S. meat industry were likely “to suffer tremendous financial burdens” as a result of the coronavirus crisis. Pork processors were expected to bear the brunt of plant closures, the analysts said, while beef processing was thought to be in a better position. The analysts at Bank of America Securities stopped short of warning about the prospect of empty meat cases at the grocery store anytime soon. But, they did stress those concerns “could become greater” if plants were unable to re-open...MORE