Tag Archives: Meat markets

Why stock market bulls are cheering the S&P 500’s close above 4,231

The S&P 500 index on Friday finished above a chart level that delivered a dose of encouragement to stock-market bulls arguing that the U.S. bear-market bottom is in, though technical analysts warned that it might not be a signal to go all in on equities.

The S&P 500
SPX,
+1.73%
on Friday rose 1.7% to close at 4,280.15. The finish above 4,231 would mean the large-cap benchmark has recovered — or retraced — more than 50% of its fall from a Jan. 3 record finish at 4796.56.

“Since 1950 there has never been a bear market rally that exceeded the 50% retracement and then gone on to make new cycle lows,” said Jonathan Krinsky, chief market technician at BTIG, in a note earlier this month.

Stocks rose across the board Friday, with the S&P 500 booking a fourth straight weekly gain. The Dow Jones Industrial Average
DJIA,
+1.27%
advanced more than 420 points, or 1.3%, on Friday and the Nasdaq Composite
COMP,
+2.09%
rose 2.1%. The S&P 500 attempted to complete the retracement in Thursday’s session, when it traded as high as 4,257.91, but gave up gains to end at 4,207.27.

Krinsky, in a Thursday update, had noted that an intraday breach of the level doesn’t cut it, but had cautioned that a close above 4,231 would still leave him cautious about the near-term outlook.

“Because the retracement is based on a closing basis, we would want to see a close above 4,231 to trigger that signal. Whether or not that happens, however, the tactical risk/reward looks poor to us here,” he wrote.

What’s so special about a 50% retracement? Many technical analysts pay attention to what’s known as the Fibonacci ratio, attributed to a 13th century Italian mathematician known as Leonardo “Fibonacci” of Pisa. It’s based on a sequence of whole numbers in which the sum of two adjacent numbers equals the next highest number (0,1,1,2,3,5,8,13, 21 …).

If a number in the sequence is divided by the next number, for example 8 divided by 13, the result is near 0.618, a ratio that’s been dubbed the Golden Mean due to its prevalence in nature in everything from seashells to ocean waves to proportions of the human body. Back on Wall Street, technical analysts see key retracement targets for a rally from a significant low to a significant peak at 38.2%, 50% and 61.8%, while retracements of 23.6% and 76.4% are seen as secondary targets.

The push above the 50% retracement level during Thursday’s recession may have contributed to a round of selling itself, said Jeff deGraaf, founder of Renaissance Macro Research, in a Friday note.

He observed that the retracement corresponded to a 65-day high for the S&P 500, offering another indication of an improving trend in a bear market as it represents the highest level of the last rolling quarter. A 65-day high is often seen as a default signal for commodity trading advisers, not just in the S&P 500 but in commodity, bond and forex markets as well.

“That level coincidentally corresponded with the 50% retracement level of the bear market,” he wrote. “In essence, it forced the hand of one group to cover shorts (CTAs) while simultaneously giving another group (Fibonacci followers) an excuse to sell” on Thursday.

Krinsky, meanwhile, cautioned that previous 50% retracements in 1974, 2004 and 2009 all saw decent shakeouts shortly after clearing that threshold.

“Further, as the market has cheered ‘peak inflation’, we are now seeing a quiet resurgence in many commodities, and bonds continue to weaken,” he wrote Thursday.

See: Stock-market euphoria meets bond-market pessimism as ‘strange week’ comes to end

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Shanghai lab’s fake pork dumplings help China go beyond meat

A visitor tries a Beyond Meat plant-based protein substitute at the Restaurant & Bar and Gourmet Asia expo at the Hong Kong Convention and Exhibition Centre in Hong Kong on November 11, 2020.

Peter Parks | AFP | Getty Images

If a Chinese-based business owner has wanted to create and sell a meat-free pork dumpling over the past decade, they might well have visited a three-story restaurant-laboratory in a commercial district of Shanghai to seek the help of Dr. Dong-Fang Chen. 

He earned his PhD from Cambridge by focusing on plant molecular genetics, then worked at AstraZeneca, and now as vice-president for R&D in Asia-Pacific, he manages a group of several dozen scientists in Shanghai. They’re part of a global research workforce of roughly 1,000 at a Swiss firm called Firmenich, the world’s largest private business focused on developing flavors and aromas. 

Chen’s team is tasked primarily with helping global and Chinese food businesses improve the taste and texture of their products, and these days, particularly those made using meat and dairy alternatives. Firmenich, doesn’t reveal its client list, but it includes some of the world’s largest food, fabric, beauty and household care businesses.

Beyond Meat increasing China focus

The plant-based protein market in China is attracting more attention. Just this month, Beyond Meat announced it was launching an online store for the Chinese market, in partnership with the e-commerce platform JD.com, and plans to expand beyond its current retail partners in China, including Starbucks and Yum China Holdings, to around 300 Chinese cities at a time when local consumers are more frequently buying fresh food online. 

Both Beyond Meat and its main U.S. rival Impossible Foods see big opportunity in China and are aware success requires more than importing successful ideas from Western cuisine. “I will work very hard to make sure that we’re not exporting American taste,” Beyond Meat CEO Ethan Brown told CNBC last September.

Late last year, Nestle launched a brand called Harvest Gourmet, offering non-meat burgers and nuggets, but also pork belly and kung pao chicken, among others, through Alibaba Group’s internet Tmall site and its Hema grocery store chain. 

Both Nestle and Beyond Meat have built faux-meat manufacturing facilities in Tianjin and Jiaxing respectively, in competition with local giants Zhenmeat and Starfield. 

Plant-based meat dishes are seen offered at a Starbucks store on April 22, 2020 in Shanghai, China.

VCG | Visual China Group | Getty Images

This explosion of interest in plant-based consumables is reflected across Asia. West Coast start-up Eat Just received approval from Singapore regulators to sell its chicken replacement, developed from animal cells in a laboratory, around the same time as NR Instant Produce of Thailand went public after the success of its jackfruit-derived faux-pork product. Then in June, Philippine food giant Monde Nissin went public on the Philippine Stock Exchange, the largest public offering in the country’s history, as it sought to expand its own successful line of plant-based meat products. 

Recreating a local favorite like the pork dumpling

While many of the plant-based products are based on Western cuisine, Beyond Meat has said it is adding new lines on JD.com to appeal to the Chinese market, including Beyond Pork and other locally-targeted cooking ingredients, such as lion’s head meatballs and pork dumplings. The latter are a hugely popular dish in China, but as a research subject Firmenich’s Chen says dumplings are challenging to reverse engineer, since the “pork flavor is very, very subtle, very sophisticated.”

His team has delivered a large variety of client briefs focused on meaty favorites — some local, like pork dumplings, some more universal, like chicken nuggets. They do this by figuring out why the original product tastes and feels and smells the way it does, then they replace the meat-derived building blocks — proteins, carbohydrates, fats — with their plant-derived counterparts, before combining them microscopically to mirror the flavors and smells of the original. 

(From left) Chef Nicolas Maire and flavorists Liliana Favaron and Mark Rubin taste vegetal steak at the headquarters of Swiss group Firmenich, one of the world’s leading flavor manufacturers, near Geneva. Firmenich is advising and supplying a host of start-ups and food giants with technical expertise in recreating meat taste and texture.

Fabrice Coffrini | AFP | Getty Images

Sometimes the process can take just days, if they already have an off-the-shelf solution prepared, but occasionally it requires months of intensive research by a team of twelve with varying forms of expertise — formulators, chemists, flavorists among them. “This sounds easy to do, but actually it takes lots of science,” Chen says, referring excitedly to advanced techniques like gas chromatography or mass spectrometry. “This is not trivial.” 

The markets these scientific breakthroughs are servicing are large. Chen’s group of Shanghai-based research scientists and chefs has tripled in size over the past decade, a process partially driven by the fact that successful start-up businesses in the United States, like Beyond Meat and Impossible Foods, have “triggered a revolution of using modern science,” Chen says. 

Future food for the Chinese population

For Firmenich, the growing demand for meat alternatives in China and the broader Asian market led them to launch a Singapore innovation hub focused on developing new plant-based protein products. Jun Saplad, based in Singapore as the head of the company’s savory division in Asia, had his own epiphany about the sector at a Beijing conference in 2019. 

“The government was the key driver for that forum,” he said, describing panel after panel in which Chinese officials, academics and business leaders promoted plant-based proteins, for a country that currently consume more than one-quarter of all global meat supplies, according to the USDA. “They’re effectively promoting future food for the Chinese population,” Saplad said.  

Thanks to accelerating urbanization and a growing middle class with rising income and consumption levels, Asia is also the fastest-growing region in the world for packaged food, not to mention its sheer scale. “Asia has 4.7 billion mouths to feed,” Saplad said. “That’s 60% of the global population, and in China and India alone it’s almost 3 billion.” 

The Asian portion of the meat-alternative market is currently worth only around $1 billion, Saplad estimates, but courtesy of its younger demographic, with rising awareness about the climate impacts of their culinary choices, he projects that could expand five-fold within the next decade.

And Saplad reckons Chinese firms have the potential to become major suppliers of plant-based meat alternatives too, for the rest of the world, including the U.S. and Europe. “You’re actually seeing companies, big global companies investing into China for China domestic consumption — as well as for exports,” he said.

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