Almost two years ago, I wrote about the iPath Livestock ETN, a unique exchange-traded note which, for the first time, opened up cattle and hog markets to U.S. investors via a simple stock account.

It was an unfortunate time to go hog-wild for pigs...or cattle. Thanks to the credit crisis and recession, prices for most commodities, including livestock, collapsed in 2008 as investors factored in decreased consumer demand.

The environment has changed once again. Retail stocks have rallied, as have many of the food and restaurant stocks profiled this summer. On a 12-month basis, retail sales are up 5.4% since December 2008, indicating that while the consumer is down, he s certainly not dead.

Nor is he starving. The United States has the third greatest per-capita beef consumption of any country world-wide, behind only cattle-crazy Argentina and Uruguay. From Tennessee to Texas, we love our beef.

America s Beef Addiction

Per Capita Beef Consumption

Country	Pounds
Source: USDA.gov
Argentina	64.6
Uruguay	50.6
United States	41.0
Australia	35.0
Canada	32.3
New Zealand	28.5
Chile	22.2
Mexico	17.7
Russia	13.8
South Korea	11.1
Japan	9.2
Egypt	7.1
China	4.3
India	1.6

Which is exactly why you might now want to again consider a position in COW, which tracks these vitally important markets you likely enjoy every day but probably don t think too much about. The fund is a debt obligation of Barclays that tracks an index of 63% live cattle, 37% lean hogs.

One of the major realities and frustrations of markets in recent years has been their increasingly tight correlation with risk assets such as emerging markets and gold moving in near lockstep with stocks of all sizes. To that end, one of the attractions of livestock is the asset s weak correlation to almost everything else, boasting a nearly insignificant 0.16 relationship to the S&P 500 index, a 0.04 connection to the bond market, and 0.23 to commodities in general. This is truly an asset that moves to its own beat.

Cows Don't Correlate

Source: iPathETN.com
Dow Jones-UBS Livestock Total Return	1.00
S&P GSCI Commodity Index	0.26
S&P 500 Stock Index	0.16
Barclay's Aggregate Bond Index	0.04
MSCI EAFE World Stock Index	0.17

That tendency was evident in 2009. While equity indexes bottomed in March, the decline in livestock prices didn t reverse until October and still have recouped only a fraction of their precollapse highs.

My primary attraction is due, not surprisingly, to the price action of the security itself which, thanks primarily to higher cattle prices, has recently tapped peaks above $29, which were not seen since last summer. While chart patterns are more art than science, it s not difficult to see the bullish ascending triangle and breakout that s been forming since last fall.

Go Whole Hog

iPath Livestock ETN (COW) - 6 months

Moreover, the livestock market is tiny, with only $10 billion in open interest held at the Chicago Board of Trade within live cattle and $5.9 billion held on live hogs. While those numbers seem impressive, they are dwarfed by the speculative and commercial interest in corn ($21 billion), gold ($60 billon), crude oil ($100 billion) or 10-year Treasurys ($150 billion). The iPath note s market cap is a mere $94 million a pittance when compared with speculative favorites like the $4.3 billion United States Natural Gas Fund (UNG) .

This Little Piggy

Value of Aggregate Open Interest in Dollars*

Source: Bloomberg, Chicago Mercantile Exchange, Rosewood Research
* January 20, 2010

up 95% or sugar (up 105%.

And although it s certainly more esoteric than shares of Coca-Cola or your average large-cap mutual fund, the Livestock ETN gives you direct exposure to the hamburger on your bun or the bacon on your plate. My approach would be to take an initial position amid the security s recent strength and then watch closely what transpires. If the rally fades, the exposure can be cut near the December lows. If it rallies go whole hog.

At the time of writing, Hoenig s fund held positions in many of the securities mentioned.