Livestock Investments Riding High, Under The Radar

October 30, 2014

Several factors have combined to make livestock a solid investment over the past few years.

 

Starting in earnest in September, many commodity investors have suffered a horrible hammering over the last six-plus weeks. On the back of fears around weakening growth not only in Europe—in particular in that powerhouse Germany—but also the emerging markets, as well as a strengthening U.S. dollar, the prices of many commodities have tumbled.

Oil, for example, seems to be sliding on a fairly extended slippery slope.

But for some other investors in commodities, 2014 has been, and continues to be, a bumper year. This is certainly the case for those involved in livestock, especially in the U.S.

In contrast to so much of the dire news from so many markets, recently there was some bright news in the world of cattle, hogs and, yes, broiler chickens ("broilers").

Livestock Prices Rising

The Livestock Monitor of Oct. 3 published by the Livestock Marketing Information Center had this to say: "Prices for livestock have been very good this year, most setting record highs, such as milk, hogs, broilers, and fed cattle."

With a further gloss that: "For hogs, broilers, turkeys, and steers and heifers, this summer has seen the best feed price ratios since 2006 … Sector wide for the livestock industry, the margins are the best they have been in at least six years. With expectations of even lower feed costs in the fourth quarter, feed price ratios are expected to continue to improve, and in some sectors could break records."

The livestock sector may, currently, be unique in having so much going for it.

On Oct. 9, Morningstar reported that livestock was the best-performing sector of 2014: "The Morningstar Livestock Commodity Index which tracks the price of cattle and pigs has returned 32% so far this year."

How To Invest

So if you were lucky enough to ride the rise in livestock, how might you have done it? As with a number of other commodities, there are different ways to gain "access" to livestock. These range from owning a livestock enterprise to owning stocks of companies that own livestock, and from futures to ETFs.

 

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