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 sell-offs 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, and in 2017 they are looking relatively brighter.

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, Lean Hogs has been the best performer with 23.1 percent YTD gains after it was up almost 7 percent in 2016.
• The performance of the Feeder Cattle has been well so far. In 2016, the price was down more than 24 percent and this year so far, the price is up by 17.2 percent.
• The rest of the pack hasn’t performed that well. The worst performer has been Milk Class III, which is down 3.4 percent so far this year, followed by Live Cattle (-0.5 percent).

This group was the worst performer last year with the average loss of 2.7 percent and this year, the pack is up 9.1 percent. The pack is down around 1.3 percent since our last review in June this year.