Pigging Out: ETFs for Hogs as Pork Shortage Looms

ETF Trends

Corn and agriculture ETFs aren’t the only sectors that could benefit from the worst U.S. drought in over five decades.

“U.S. hog farmers are slaughtering animals at the fastest pace since 2009 as a surge in feed costs spurs the biggest losses in 14 years, signaling smaller herds next year and a rebound in pork prices,” Bloomberg News reported Tuesday.

There are several exchange traded products that invest in livestock and have exposure to lean hogs.

The iPath Dow Jones-UBS Livestock Subindex Total Return (COW) is the largest such product although the exchange traded note only has a market capitalization of $55.8 million.

The ETN had about 67% in live cattle futures and 33% in lean hogs at the end of August, according to issuer Barclays. ETNs are debt instruments that promise to pay the return of an index, minus fees and taxes.

Other options include E-TRACS CMCI Livestock Total Return (UBC) and iPath Pure Beta Livestock ETN (LSTK).

“Often when corn prices rise, livestock prices rise with them as farmers must pay more to feed their herds,”Alexander MacLennan writes for The Motley Fool.

Higher feed costs and corn prices are forcing farmers to slaughter hogs at a faster pace since the animals are literally eating their profits.

“The 73.3 million hogs processed in eight months through August were the most in three years, U.S. Department of Agriculture data show. Pork supply will drop to the lowest per-capita since 1975 next year, the USDA estimates,” Bloomberg reported.

“It’s only going to get worse on the higher feed prices,” Mark Greenwood, vice president at AgStar Financial Services, said in the article.

Teucrium Corn Fund (CORN) is up nearly 30% the past three months on the drought. [Corn ETF is Standout Performer in Third Quarter]

Corn prices are so high that cattlemen are reportedly feeding cows candy and orange peels to replace the starchy sugar content of corn.

iPath Dow Jones-UBS Livestock Subindex Total

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livestock-etfs

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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