FxWirePro Commodities Watch (Meats)

Background:

There has been a change in tide in the commodities market, which we feel is of utmost importance to keep a tab on.

Historically speaking, a rise in commodity prices has triggered a vicious chain reaction. First, the prices of commodities go up, which in turn triggers a rise in inflation, which again has historically triggered selloffs in bonds, which has not been good for equities sometimes. In a world, where central banks have provided unprecedented stimulus, the rise in inflation is the biggest possible threat.

2016 can easily be called as the year of the commodities. They were the best performing asset class. 2017 was good too, but in 2018, the whole commodity sectors are struggling amid tariffs and a slowdown in the Chinese economy.

The ‘Meat’ pack has been the worst performer of the year in 2016, and in 2017 they were relatively brighter.

Performance 2017:

In this article, we evaluate the performance of the meats and products, which are consumed in large parts of the world.

• In this pack, Feeder Cattle has been the best performer in 2017 with 15.45 percent gains after it was down almost 24 percent in 2016. Live Cattle was up 6.9 percent YTD.
• Lean hogs price was up 11.5 percent YTD.
• The worst performer has been Milk Class III (-19.3 percent).

Performance 2018:

• This pack hasn’t done well in 2018. The worst performer of this pack has been Lean hogs (-32.5 percent), followed by Live Cattle (-12.4 percent)
• The best performer of the pack is Milk Class III (+14.3 percent), followed by Feeder Cattle (+2 percent).

The pack is down 7.1 percent so far in 2018. It is down almost 10 percent since our review, a month ago.