Hogs and heifers were on the mind of Fast Money trader Joshua Brown as commodity prices continued to surge Tuesday. Brown, Vice President of Investments at Fusion Analytics, was specifically watching the exchange traded funds that tracked the prices of lean hog futures, live cattle, and feeder cattle.
“COW -- a fund that is half hogs, half cows -- has just been a beast,” said Brown, referring to the UBS livestock ETN that is up nearly 17% from its 52-week low.
The price of futures contracts for all three were up more than 28% in the past year. Cattle futures hit a record of $1.66 per pound on Jan. 18.
Fueling the rising price of hogs and cows are shortages brought on, in part, by rising grain prices. As feed prices have surged, farmers have slaughtered cows earlier rather than let them grow into mature animals and breed, adding to their feed costs, said Brown. As a result, meat stocks are slim.
In fact, the U.S. cattle herd is at its smallest level in more than 50 years, according to the U.S. Department of Agriculture. The number of beef and dairy cows is down 1.4% from a year earlier, according to the most recent USDA report, released Jan. 28.
Low meat stocks are already impacting consumer prices. Last month, McDonald’s said it would raise prices this year because of higher costs.