Cattle Market Good as Gold

January 6, 2012 01:02 AM
 

As cattle prices reach record levels, investors are starting to take notice as well.

Data compiled by Bloomberg showed that the Standard and Poor's GSCI Feeder Cattle Total Return Index rose 2.45% in six months so "feeder-cattle futures provided the safest returns of all commodities including gold in the second half of 2011, when adjusted for volatility, as high feed costs and drought led to smaller herds and record prices." While gold did gain more, the higher volatility reduced the adjusted gain.

Those in the beef industry have watched cattle prices steadily climb as the beef herd continues to shrink. Those tight supplies are attributed to continued drought in major cattle producing states and higher input costs, which are keeping numbers low for the near term. With cattle, increasing production to meet demand takes time, and moisture to grow forage and feed. 

So whether investing in commodities or selling cattle, this is going to be another big year for the cattle market.

Read the entire story from Bloomberg: "Cattle Top Gold as Safest Commodity Return by Volatility Measure."

 S&P GSCI

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