000523 Monday's Commodities Roundup

Chicago - Pork belly futures fell heavily Monday on the Chicago Mercantile Exchange amid increasing evidence that supplies are now running well ahead of demand - a possible sign the recent bacon boom may have peaked.

In other markets, grain and soybean prices slid sharply and sugar jumped to a 61/2-month high.

Prices for pork bellies, from which bacon is made, have been red-hot in recent months as fast-food chains roll out new sandwiches with bacon in them or add it to season the taste of beef being cooked longer to guard against E. coli bacteria.

But bellies crashed last week after fast-rising prices hit $1 a pound and the market turned lower on the belief that demand had peaked as stockpiles were rising.

Following a brief recovery at week's end, pork bellies for July delivery tumbled 2.95 cents Monday to 86.15 cents a pound, a 71/2-week low, in the wake of U.S. Department of Agriculture figures showing ample supplies and falling retail prices.

Summer barbecue season is certain to revive demand, but investors fear it may not be enough to compensate for big supplies of frozen pork bellies.

“There comes a time in any market, whether it's bacon or whatever, where you just oversaturate the market,” said Dave Maher, an analyst for Securities Corp. of Iowa.

“It gets to a point where people say 'I had bacon on this,' 'I had bacon on that' - I think I'll try something else,” he said.

Faced with similar supply-demand discrepancies, June lean hogs fell the exchange-imposed limit 2 cents to 70.85 cents a pound.

Corn and soybeans swooned on the Chicago Board of Trade after the issuance of rainy weather forecasts that bode well for newly planted crops but not for prices.

Prices for the two crops fell about 3% in a decline that was even steeper until the National Oceanic and Atmospheric Administration said abnormally dry conditions would continue in June, July and August - reviving drought fears.

July corn fell 7 cents to $2.383/4 a bushel; July soybeans fell 16 cents to $5.493/4 a bushel; July wheat fell 2 cents to $2.821/4 a bushel; July oats fell 21/2 cents to $1.193/4 a bushel.

Sugar zoomed higher on word that this year's crop in Brazil, the No. 1 exporting country, may be down 10% over last year. That would shrink the world sugar glut.

July sugar settled up .17 cent at 6.95 cents a pound on New York's Coffee, Sugar & Cocoa Exchange.

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