4 ETFs To Play Rising Meat Prices (COW, DBA, DE, MOO, PAGG, POT)
Published on Wednesday, 08 June 2011 22:19 Written by Kevin Grewal
Imbalances in supply and demand continue to take its toll on food prices as the price of meat continues to rise, giving positive support to the PowerShares DB Agriculture Fund (NYSE:DBA), the iPath Dow Jones-UBS Livestock Subindex Total Return ETN (NYSE:COW), the Market Vectors Agribusiness (NYSE:MOO) and the PowerShares Global Agriculture Portfolio (NASDAQ:PAGG).
According to the United Nation’s Food and Agriculture Organization’s meat index, beef and sheep prices are at an all time high and poultry and pig meat costs are on the rise. On the demand side, demand in much of the developed world like the US remains intact, while demand in the developing world for meat continues to rise. According to the US Department of Agriculture, demand in Asia, in particularly South Korea, Hong Kong and China continues to rise. Furthermore, demand is expected to remain elevated in the near-term future as disposable income in developing nations continues to increase.
On the global supply side, weather conditions around the world have taken a toll on production, putting a constraint on supply. Additionally, declines in cattle inventories will eventually diminish the pool of cattle available for placement which, in turn, will decrease the number of fed cattle available for slaughter. Lastly, it takes nearly two to three years to substantially increase herd so production will likely remain lower than demand.
As mentioned above, four ways to capitalize on increased meat prices include:
* PowerShares DB Agriculture Fund (NYSE:DBA), which holds futures contracts in feeder cattle and lean hogs. DBA allocates nearly 14.8% of its assets to futures in cattle and 8.1% to lean hog futures.
* iPath Dow Jones-UBS Livestock Subindex Total Return ETN (NYSE:COW) seeking to replicate the performance of the Dow Jones-UBS Livestock Subindex Total Return Index, which allocates 59.27% of its assets to cattle and 40.73% to lean hogs.
* Market Vectors Agribusiness (NYSE:MOO), which tracks companies that are involved in the agriculture business. Top holdings include seed giant Monsanto (MON), fertilizer king Potash Corp. (NYSE:POT) and agricultural machinery maker Deere and Co. (NYSE:DE).
* PowerShares Global Agriculture Portfolio (NASDAQ:PAGG) seeks to track companies involved in the agriculture business as well, but with a more dispersed weighting formula that favors international companies and appears to allocate a larger percentage of its assets to fertilizer and chemical companies than MOO.
Disclosure: No Positions
Kevin Grewal is the founder, editor and publisher of ETF Tutor.
- AT&T And America Movil To Provide Deeper National Reach For Advanced Enterprise Services Across Latin America
- AT&T 4G LTE Available In Willimantic
- AT&T 4G LTE Available In Torrington
- AT&T And The University Of Kansas Team Up To Enhance Wireless Coverage On Lawrence Campus
- AT&T 4G LTE Available In Fargo
- AT&T 4G LTE Available In Amarillo
- Benefitfocus Announces Pricing of Initial Public Offering
- Trends of China Gear Industry 2013 Analysis & Reviewed in New Research Report at RnRMarketResearch.com
- Product Launch Formula 4.0 Bonuses Total $5000 at BrianHanson.com
- Datex Presents Motorola Solutions Webinar “Is It ‘Smart’ to Use Smartphones for the Enterprise?”
Related Partner Headlines
Recent Trading Ideas
Latest Partner Headlines
Dow JonesCompany ID [INDEXDJX:.DJI] Last trade:18,096.90 Trade time:4:35PM EST Value change:▼106.47 (-0.58%)
S&P 500Company ID [INDEXSP:.INX] Last trade:2,098.53 Trade time:4:35PM EST Value change:▼9.25 (-0.44%)
NASDAQCompany ID [INDEXNASDAQ:.IXIC] Last trade:4,967.14 Trade time:5:15PM EST Value change:▼12.76 (-0.26%)
In The Wires
GW Pharmaceuticals Commences Phase 1 Clinical Trial of GWP42006 as a Potential Treatment for Epilepsy
NTT Communications and JBA's SDN Project Wins IBC 2013 Innovation Award
Frost & Sullivan Honours Interactive Intelligence with its EMEA Contact Centre Company of the Year Award
AT&T And America Movil To Provide Deeper National Reach For Advanced Enterprise Services Across Latin America
$500,000 Shopify Build a Business Competition Has Just Been Announced for 2013
Solomon Associates Hydrocarbon Loss Reduction Seminar Shares Practices that Lead to Significant Savings
AT&T 4G LTE Available In Willimantic
AT&T 4G LTE Available In Torrington