This is Bloomberg on Bacon

Bacon Price Surge May Last Through August as Herd Cutbacks Tighten Supply
By Whitney McFerron - Aug 4, 2010 2:48 PM CT Email Share
Business Exchange Twitter Delicious Digg Facebook LinkedIn Newsvine Propeller Yahoo! Buzz Print Bacon lovers in the U.S. are paying record prices during the seasonal summer peak for consumption, and costs may keep rising through August because smaller hog herds led to an unprecedented plunge in meat inventories.

Wholesale pork bellies, which are cured and sliced to make bacon, are up 72 percent in the past year to $1.4308 a pound, the highest price since at least 1998, government data show. Stockpiles in warehouses monitored by the Chicago Mercantile Exchange tumbled 73 percent in the year through July as U.S. hog producers cut their herds to stanch losses in 2008 and 2009.

Prices usually climb in August, when tomatoes are ready for harvest in the Midwest and more people eat bacon, lettuce and tomato sandwiches, said Altin Kalo, a commodity analyst for Steiner Consulting Group. While pork bellies will probably fall later this year as demand slows, prices will be records for each month through year-end because of tight supplies, he said.

“What you have with bacon is what economists call inelastic demand, meaning it doesn’t vary much,” said Chris Hurt, a livestock economist at Purdue University in West Lafayette, Indiana. “If a person wants a BLT sandwich and likes that in summer when their patio tomatoes come on, then it doesn’t make a difference if bacon is $2 a pound or $6 a pound. They’re going to go out and buy it. When it’s in short supply and a lot of people want it, they’ll pay a higher price.”

As far as adjusting to cash - that's possible/likely if the commercials still ran the board price.  I wonder any more if we are in the same boat as the commodities - volatililty and funds rule.  Does it mean we'll follow technical trends instead of fundimental/seasonal - maybe for now. 

I can't help but think that liquidation is not completely over yet.  I still have some hogs from part of the sow herd that is now gone.  There are some other pigs that were previously sold that will replace them, but it will be after september before the actual effect is in fully place.  I would think that would keep the market from tanking.  My hope is that everyone left hedged corn for long enough to weather this latest Russian wheat deal - it already appears to be winding down somewhat.  I'm guessing many producers were looking forward to a correction (that was starting last monday) to get a chance to lock in lower corn/ddg/germ/soy. 

Thanks,

Pat

Ps: I have to be constantly reminded/taught about how the hog market used to typically fluctuat and it did the first few years we grew hogs.  Then it changed and I'm not sure I'd recognize the historical market if it bit me.  It almost seems better to read time, people and vannity fair to see what's influencing fund buyers attitudes (of course SC already does this, but won't post his findings on his website - thats for paying customers ;-)