While silver and crude price movements have been hogging the spotlight lately, meats have been quietly tanking since the beginning of April.

What’s with the shift in momentum? Part of it is likely the general ‘risk off’ commodity sell off seen in May. But there are more involved supply/demand issues surrounding this sell off as well, with feed and cold storage reports indicating there is more supply in cattle and hogs than originally anticipated. Supply concerns have also escalated on global economic slowdown concerns, as it could impact the overall demand for meats among consumers. All of these issues are exacerbated by seasonal downward pressure. Once you get closer to Memorial Day and the associated grilling season, most wholesalers and retail buyers have already stocked up, decreasing demand. Combine all of this with the increasing cost of feeding these livestock, and you have a recipe for a downward spiral in price. Basically, there’s more meat than people thought and less people willing to buy. Something has to give.

What does all this mean for managed futures? Such moves are generally good for traditional trend following managed futures programs, and sure enough we have seen a few programs benefitting from the down trend, with short positions taken by Clarke Capital Management and Hoffman Asset Management to name two. Elsewhere, agricultural specialist Rosetta has short meat positions, while meat specialist NDX is out of the market currently, but did take advantage of the sell off in May to post gains.

How durable is this trend? Only time will tell, and with today’s big stock market sell off, all bets could be off. Once the dust settles, we’ll find out whether this movement is one we should get used to or not.