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An Update For Carnivores At The Start Of The 2020 Grilling Season


  • Divergence and price dislocations dominate trading over the past months.
  • Live cattle futures have recovered.
  • Feeder cattle futures have done a bit better.
  • Lean hogs have also moved higher from the lows.
  • The price action and fundamentals are telling us that 2021 could be a bullish year for the animal proteins - COW on dips.
  • Looking for more stock ideas like this one? Get them exclusively at Hecht Commodity Report. Get started today »

In March and April, while markets across all asset classes were falling during the risk-off selling caused by the spread of coronavirus, the animal protein futures were preparing for the peak season of demand. The grilling season starts on the Memorial Day weekend and runs through the Labor Day holiday. The summer months are a time of the year to enjoy the outdoors with family and friends. The barbecue is often the focal point for celebrations and get-togethers. Burgers, steaks, ribs, sausages spend more time sizzling on the grill from June through September than during the other months of the year.

In 2019, the price of live cattle futures peaked in mid-March at $1.3045 per pound, and lean hogs reached its peak at just over 93 cents in May. This year, the global pandemic sent the price of cattle futures to 81.45 cents in late April, the lowest level since 2009. Lean hogs fell to 37 cents per pound in March, a price not seen since 2002. The meat futures have recovered over the past weeks, but they are still below the levels last year in the futures market. Meanwhile, the prices that consumers are paying are much higher. I last wrote about the meat markets on Seeking Alpha on April 21. In that piece, I explained why I thought the low prices for beef and pork would lead to far higher levels in the coming months and years.

The iPath Series B Bloomberg Livestock Subindex Total Return ETN (NYSEARCA:COW) moves higher and lower with meat futures prices.

Divergence and price dislocations dominate trading over the past months

The spread of the COVID-19 caused risk-off conditions in many markets. In the cattle and hog futures markets, prices fell to the lowest levels in many years. Ranchers found themselves with a glut of cows

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This article was written by

Andrew Hecht profile picture

Andrew Hecht is a 35-year Wall Street veteran covering commodities and precious metals.

He runs the investing group The Hecht Commodity Report, one of the most comprehensive commodities services available. It covers the market movements of 20 different commodities and provides bullish, bearish and neutral calls; directional trading recommendations, and actionable ideas for traders. Learn more.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The author always has positions in commodities markets in futures, options, ETF/ETN products, and commodity equities. These long and short positions tend to change on an intraday basis.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (6)

drmwsunner profile picture
Plant based food products are the future for the survival of the planet.....animals being slaughtered for food is cruel and senseless. Stop buying this COW ETN product & help save the planet. The younger generation "gets it."
Why is it OK to kill and eat plant life @drmwsunner ? You see @drmwsunner you were born into a trap. You must daily kill living organisms so you can stay alive. You say what @drmwsunner ? You can drink milk, nectar, eat fruit and honey and not kill anything? No, they all have trillions of living bacteria on and in them. There is no way out. By the way, the human body is composed of 1 trillion human cells and 9 trillion bacterial cells.

The younger generation "gets it."

Ahh. The astonishing arrogance of that statement. Who are you talking about? Kylie Jenner? Don't make me laugh, or rather, please do.
@Andrew Hecht ,
Thank You very much for all the incite , as well as , the " Cause and Effect " this sector poses …
Article much appreciated ..
Great Read Andrew ...
Great title! Glad I got here before the vegans.
Cow is off the bottom.
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