Agricultural commodities vs. Livestock, why the disconnect?

Agricultural commodities are in decline while Livestock are ramping

Here on CPI day, I thought it would be interesting to look at agricultural commodities along with the livestock that consume some of them. Whatever the February CPI report has to say today, know that it is lagging, sticky stuff that are the effects of the inflation that has already passed.

Inflation was the policy of the Fed back in 2020 and the effects are the gift that have kept on giving as those in the supply/services chain bleed it (and the consumer) for all it’s worth.

The Agricultural commodities index (GKX) had been going sideways after the huge decline in 2022, failed to take out the down-turning daily SMA 200 and has tanked to a new low within what is now a fairly new downtrend.

Agricultural commodities index (GKX)

Meanwhile, the Livestock index (GVX) is ramping up to the degree where it makes me want to try another attempt at a meat free lifestyle (I’ve failed at that in the past). One of the costs going into raising livestock is the Ags, as represented above. Another is fuel and materials and by extension of the Ags, chemicals. All that stuff is down, and yet here goes the gouging, I would guess at the hands of the large factory farmers. A disgusting industry.

Livestock index (GVX)

It certainly does look like a boom time for the livestockers. I hope they enjoy it while they can. Maybe someone has industry information about why this discrete spike in livestock is happening (comment below), otherwise it seems illogical at best, and unscrupulous at worst.

Okay now, bring on CPI and whatever hysterics will follow it today.

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This Post Has 7 Comments

  1. Wil

    Herd liquidation due to drought.

    1. Gary

      Thank you! I thought it must’ve been some kind of discrete situation rather than inflation’s effects.

  2. Bruce Rosswurm

    Hi Gary, do you know what all is included in the livestock index?

    1. Gary

      Actually, I just discovered that it exists this morning. So no, I have not looked into it. A search on it would probably yield some info.

  3. Bruce Rosswurm

    Gary, I raise hogs, and hogs are in the middle of their range. Mainly because of cattle is my guess. And I can assure you it isn’t becaus of the boogey man called “Factory Farms”.

    1. Gary

      I am just part of the public, with regards to that boogeyman. I have no inside knowledge whatsoever about the industry. If anything, I’d guess that the factory farms would tend to keep prices down. A previous commenter mentioned that a drought is causing the price spike. Does that sound about right?

      1. Bruce Rosswurm

        Yes, Think the drought in the plains caused cattle herd liquidation. So now less of a supply. I am not an expert by no means.

Comments are closed.