Livestock ETNs Set to Fatten Up? | ETF Trends

While most commodities continued to weaken Monday, livestock-related exchange traded notes strengthened on potential tighter supply in the spring and summer season ahead.

On Monday, the iPath Bloomberg Livestock Subindex Total Return ETN (NYSEArca: COW) was up 1.5%, UBS E-TRACS CMCI Livestock Total Return ETN (NYSEArca: UBC) rose 3.4% and iPath Pure Beta Livestock ETN (NYSEArca: LSTK) gained 1.4%.

Meanwhile, the broader PowerShares DB Commodity Index Tracking Fund (NYSEArca: DBC), which takes a heavy position in the energy-related commodities, dipped 0.4% Monday. [Commodity ETFs Take Beating from Fed]

The livestock commodity-related ETNs rallied Monday as U.S. cattle futures jumped by their daily trading limit early morning following government data on Friday that revealed a record-low number of cattle placed into feedyards for November, reports Ilan Brat for Dow Jones Business News.

CME live cattle futures were up 3.6% to $1.3003 Monday. Live cattle makes up a good chunk of the livestock-related ETNs, including 66.3% of COW’s underlying portfolio and 55.8% of UBC.

The U.S. Department of Agriculture revealed that cattle movements into U.S. feedlots, or areas where livestock are fed and fattened up, fell 11% in November year-over-year to their lowest level since the department began compiling data in 1996, Reuters reported.

Observers attributed the surprisingly low cattle placement to weakening profit margins due to falling livestock prices that forced feedyards to push off new purchases of calves for fattening.