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Short and Curlies

May 6, 2009

The Longpigs were one of the lesser lights of Britpop, best known for a number 16 hit with She Said and for launching the career of Richard Hawley. Now though, apparently, short pigs are all the rage.

RoastingNews reaches us of exciting developments in the world of ETFs where the market is seeking out ways to play swine flu. ETF Securities has seen a surge in volumes and returns of its Short Lean Hogs ETC after the World Health Organisation (WHO) raised its pandemic alert for swine flu to the second highest level last Wednesday.

No word on Short Fat Hogs, but we are reliably informed that the surge in short interest in their slimline cousins has put them in the top 5 of short ETC’s by returns in the year to date. The porkers must be feeling particularly perky at outperforming the MSCI World by some 74 percent since September last year.

ETF Securities reckons the interest shows investors are using Short ETCs to benefit from an anticipated fall in demand for lean hogs on the swine flu outbreak. It notes that U.S. pork import bans have been enacted by Russia, China, the Philippines, Serbia, Kazakhstan and South Korea since the end of last week — while lean hog prices have seen sustained pressure as farmers have culled pigs, increasing supply as high feed costs and falling returns have pressured margins.  

Any Hedgies out there making this play, then get in touch.

Comments

U.S. pork import bans have been enacted by Russia, China, the Philippines and a few other countries, it strikes me that there are no protests as many may find that this smells like protectionism. The mentioned countries close their borders and shield their markets from pork imports without any proof that pigs are responsible for the virus.

 

More political point-scoring than full blown protectionism I reckon. Mind you, these scares are often used to wield trade muscle.

The lingering bans on British beef were perhaps understandable considering the ravaging effects of vCJD, but the embargos you mention look like a convenient over-reaction.

Posted by Joel Dimmock | Report as abusive
 

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