Peak Bacon!


The sudden collapse of oil prices has made people really quiet about peak oil and superspikes and various theories that were popular during the run-up. Part of the reason we were sceptical of these theories is that all commodities seemed to be running simultaneously, and we never heard people talking about peak copper or peak nickle. Anyway, it’s time to transpose the argument to hogs, which are apparently defying the commodities bust:

Bloomberg: Christmas ham is about to get more expensive. A lot more.

Hog prices are poised to jump 46 per cent by June to the highest since May 1996 as producers slaughter more breeding sows to limit losses from rising feed costs, said Jason Britt, president of Central States Commodities Inc. in Kansas City, Missouri. Fewer pigs may boost the cost of everything from Hormel Foods Corp.’s Spam to Sara Lee Corp.’s Jimmy Dean sausage.

In the worst year for commodities in at least five decades, hogs rose 6.6 per cent, the second-biggest gains on the Reuters/Jefferies CRB Commodity Index, behind cocoa. The same global economic slowdown that halted six years of rising demand for gasoline, cotton and copper also set the stage for cutbacks in hog supplies.

Perhaps it’s the fact that bacon is suddenly an uber-trendy menu item. That, and a combination of surging spam demand due to the recession.

Or the more reasonable analysis, as stated in the article: Since pigs consume all those other commodities, the boom in energy and grain caused farmers to scale back breeding. We like our theory better, however.