FxWirePro: Commodities Watch (Meats)

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

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.

Last year can easily be called as the year of the commodities. They were the best performing asset class, but will that continue in 2017 too? We are looking for the answer.

The ‘Meat’ pack has been the worst performer of the year in 2016; in 2017 they are not looking bright either.

In this article, we evaluate the YTD 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 with 10.3 percent YTD gains after it was down almost 25 percent in 2016.
• The performance of the Lean Hogs has been well so far. In 2016, the price was up 6.67 percent and this year so far, the price is up by 8.9 percent.
• The rest of the pack hasn’t performed well. The worst performer has been Milk Class III, which is down by 9.8 percent so far this year, followed by Live Cattle (+0.98 percent).

This group was the worst performer last year with an average loss of 2.7 percent and this year, the pack is up 2.58 percent.