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Livestock ETFs

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Average returns in this Category	3 months return	6 months return	12 months return	YTD return

Livestock ETFs	-1.55%	-5.56%	-23.15%	-12.49%

Ticker SPY	Name	3 months return	6 months return	12 months return	YTD return

COW	Dow Jones-AIG Livestock Total Return ETN	0.18%	-11.85%	-32.52%	-17.59%

UBC	E-TRACS CMCI Livestock ETN	-5.53%	-13.37%	-32.13%	-20.48%

LSO	ELEMENTS MLCX Livestock Index ETN	0%	-3.25%	-24.27%	-7.75%

HOGF	ETFS Forward Lean Hogs ETF	-22.64%	-34.79%	-47.77%	-40.09%

CATF	ETFS Forward Live Cattle ETF	0%	-2.4%		-4.98%

FLIV	ETFS Forward Livestock ETF	-6.77%	-16.38%		0%

HOGS	ETFS Lean Hogs ETF	7.54%	54.02%	19.49%	2.17%

LLHO	ETFS Leveraged Lean Hogs ETF	-13.08%	-50.53%	-72.24%	-55.32%

LLCT	ETFS Leveraged Live Cattle ETF	-1.96%	-6.57%	-44.82%	-17.18%

LLST	ETFS Leveraged Livestock ETF	-5.95%	-23.28%	-57.05%	-33.26%

CATL	ETFS Live Cattle ETF	-0.29%	-1%	-24.75%	-7.63%

AIGL	ETFS Livestock ETF	-1.93%	-11%	-32.58%	-16.43%

SLHO	ETFS Short Lean Hogs ETF	4.98%	32.93%	66.53%	35.47%

SLCT	ETFS Short Live Cattle ETF	-0.31%	-0.61%	26.29%	5.15%

SLST	ETFS Short Livestock ETF	4.09%	43.57%	53.63%	43.57%


	About Livestock ETFs
Livestock ETFs Overview and forecast The livestock market is one of the most sensitive on Earth to price moves. A combination of rising demand, industrial and environmental factors has made this a highly volatile market. Like other agricultural commodities, livestock prices are very fluid. That means the Livestock ETFs behave quite differently from other markets. Their chart profiles are different, too. Livestock prices have been affected by the global crash, and not positively. The lack of capital and lending hasn't helped the Livestock ETFs. A series of events like droughts, scares about things like Swine Flu and other diseases has combined to further undermine the markets in recent times. The trade differently, too. A look at volumes over the last few years will show periods of intense activity mixed with periods of virtual immobility. The net effect in the last two years has been downwards, in terms of the prices of the Livestock ETFs and ETNs. This is actually pretty normal, and in many cases prices for livestock don't move much for a while, but the Livestock ETFs have a further problem in that compared to other forms of investment, they're less attractive. Our returns figures show a generally mixed performance, and some of the Livestock ETFs have been progressing positively, and trading well. The LSE listed ETFS Lean Hogs ETF (LSE:HOGS) has been doing quite well as a trader in the second quarter of 2009 with respectable moves and volumes. Investors will note a quite different trading profile from other classes of ETFs Short term (6 months) Short term thinking for the Livestock ETFs has to be based on objectivity and a sound understanding of the market. Those not familiar with the agricultural sector and the related futures markets will need to assess relative risks. No drastic improvements or declines in the market are expected, but this is a particularly tough area for predictions. Things like the Australian drought, feed prices, freight prices, the Chinese economy, and other factors affect livestock prices both directly and indirectly. Prices can be depressed by forced selling, where graziers bail out of their herds to avoid incurring major maintenance and upkeep costs. The relative lack of capital in the investment market is a new, unwelcome, problem in the livestock industry, and it is having an effect. The short term looks rocky. Medium term (2 years) An upturn is expected in the livestock industry over time, coming off a soft bottom where rebounds are slow and low for a while. The broader picture is brighter, because the general increase in demand, prior to the crash, was pushing prices and production. Production, in fact, was having difficulty keeping up with demand. Exactly when those conditions will reemerge is another matter. The agricultural sector, generally, is notorious for its own form of doldrums, where prices move in lurches after periods of inactivity or relative price stagnation. Livestock behave exactly like other agricultural commodities in that respect. This isn't a market for na?vet? and baseless optimism. Knowledge is required to get the best out of this market, and so is patience. Long term (5 years) The long term outlook gives a bit more reason for some positive forecasts. The strictly conventional view of the current economic conditions predicts an end to the recession by 2012, and food, as a class of investment, is viewed as the Next Big Thing, partly because of undersupply to the current markets and production issues forcing up prices. That's a somewhat simple view, not taking into account the likely exploitation of rising demand by producers but the demand is definitely there, already. Livestock ETFs are well placed to capitalize on this market, when it starts to impact after capital starts moving again. The real issue is prices at the delivery end. Meat prices have been relatively high, historically, in recent times. The market may overstate the position, in terms of actual results. That can lead to a very choppy market, with investors repositioning to get away from debatable price peaks and troughs. Qualifier to projections The long term outlook for the Livestock ETFs is generally good, but with a caveat that this market can overheat quite easily. It's done it before. The price charts can get very jagged, and get on the nerves of investors, producing a reactive retreat. The agricultural sector isn't easily predicted, partly because the investment market tends to distort situations. The futures market, for example, can be considered a reasonable indicator of a general direction for agricultural prices. Nobody, however, has ever called the futures market omniscient. That's because it isn't. It creates an inertia in the investment patterns, but it doesn't mean that it's right, or doing much more than following its own trends. Investors should consider the Livestock ETFs as part of a meaningful spread across agricultural investment, but proceed with real caution, unless absolutely certain of margins and ratios of exposure. Important note: The Next Big Thing view of the agriculture sector, which will inevitably include Livestock ETFs as a high value/ high return component, should be considered to have Bubble written all over it at some point. The overheating in commodities has to be seen to be believed, and oil's recent nosedive from ridiculous heights is a primary example of that. It's really a matter of when the plug gets pulled. If ever the phrase Keep it real was good advice, this is it.

Last Updated on: 2010-01-14 02:03:40

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