Americans are going bonkers for bacon. High-protein diets and a likeness for fast-food flavor have sent pork bellies to record highs for this time of year.

Ron Plain, a University of Missouri agricultural economist, said bacon is also making a comeback at breakfast as well as becoming increasingly popular on sandwiches and hamburgers.

This is a switch from the 1970s when consumers kept bacon off their plates as they tried to avoid fats and cured meats. Then, in the 1980s, the bacon burger burst on the scene and the fast-food industry started driving the demand for bacon.

Iowa environmental regulators will soon fine as many as 600 hog-confinement operators who are late filing required waste management plans.

Cindy Martens and other officials from the Iowa Department of Natural Resources are collecting evidence, including aerial photos, and courthouse records, on the lawbreakers.

A Checkoff-funded analysis of USDA price data shows fewer hogs sold through daily negotiated transactions (the spot market) during January 2004 than during previous years, although the prices of more than half the hogs in the United States still are determined by the spot market. The analysis, conducted by Pork Checkoff consultants, reviewed data from the USDA Mandatory Price Reporting system.

“The continued decline in the negotiated or spot market hogs increases the urgency for the industry to find another form of price discovery for most of the contracts,” said Glenn Grimes, professor emeritus at the University of Missouri. “One possibility is to have mandatory price reporting of meat and tie the contracts to meat prices.”

The executive summary of the annual report noted that prices for soybeans, cotton and rice increased this year in response to reduced domestic supplies. Strong export demand supported prices for both corn and wheat, even though the 2003 harvest increased significantly.

Soybean prices are projected to drop later this year and to drop low enough in following years to trigger government loan deficiency payments (LDP).

The price for soybeans has continued above $9 per bushel in recent days on reports of short ending stocks. Prices are projected to average $5.63 for 2004/05 and $5.06 the following year as bean yields return to normal and world supplies rebound.

In spite of a record corn crop this past harvest season, corn prices have been near or above year-ago levels. Usually a large crop leads to lower prices, the FAPRI economists said.

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Initial findings of bovine spongiform encephalopathy (BSE, or mad cow disease) and avian influenza (AI) in the U.S. clouded over an otherwise Stable Outlook for the U.S. agribusiness sector, according to a special report by Fitch Ratings. However, diverse earnings streams, along with consumers' general confidence in the U.S. food supply and their desire to increase their protein intake in light of the popular Atkins and South Beach diets, eased the impact of these developments.

Diversification of earnings streams and solid U.S. consumer demand have partially mitigated the impact of reduced exports. Thus, Fitch does not expect to take any rating actions as a direct result of these events. Cargill, the largest agricultural processor, is diversified across the entire sector and Tyson, the largest meat processor, has substantial diversification within the meat proteins. These attributes in part, mitigate the agricultural shocks and so far has protected their earnings trends.

Demand is hot as a firecracker. Last month's hog prices were the highest for any February since 1997. Thus far in 2004, average daily hog slaughter is up 3.4% and pork production is up 4%. Despite all this extra pork, year-to-date hog prices are up a whopping 24% compared to the same weeks of 2003. More hogs and higher prices are a rare combination that should be savored; it won't last forever. Although, it looks likely to last well into spring.

Cash hog prices ended the week $1-4 higher than last Friday. Peoria topped out at $41/cwt on Friday, up a dollar from seven days earlier. Sioux Falls was $2 higher than last Friday with a top of $46/cwt and St Paul had a top of $43.50/cwt on Friday, up $1.50 for the week. Interior Missouri hogs had a $44.50 top on Friday. The National weighted average carcass price Friday morning for negotiated hogs with 0.9-1.1" backfat, 6 sq. in. loins 2" deep was $63.22/cwt, $3.60 higher than the previous Friday.

The USDA is forecasting pork prices at about $38-40/cwt for 2004. Fairly strong demand for pork, especially from the export market, is expected to establish a steady price scenario for the year. Prices are expected to move up into the low $40's this summer, and than fall back off and hit seasonal lows of $34-38 this fall.

Overall there will be a few more hogs to slaughter in 2004, but the number is still expected to fall about 300,000 head short of 1999's record 101.5 million slaughter. In 2004, commercial pork production is forecast at a record 20.1 billion pounds, up from a record 19.9 billion pounds in 2003. Pork production will continue to be supplemented by increased slaughter of imported hogs, and average carcass weights are expected to be about a half pound heavier.

Pork production, at 20.0 billion pounds, was 2 percent above last year, setting a new record high.

Commercial hog slaughter totaled 100.9 million head, up 1 percent from 2002 with 98.8 percent of the hogs slaughtered under federal inspection. The average live weight was up 1 pound from last year, at 266 pounds. Barrows and gilts comprised 96.5 percent of the total federally inspected slaughter.

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Apparently, processors, distributors and retailers of pork decided to accept a smaller margin for what they did with pork in 2003. The pork wholesale-retail price spread was below year-earlier levels for 12 consecutive months from November 2002 through October 2003. Prolonged declines in the wholesale-retail price spread are usually associated with periods of reduced pork production. For example, the wholesale-retail price spread was below year-ago levels for 12 months in a row from June 1995 through May 1996. During this period, commercial pork production was down 5.4% from the year before. It was below year-earlier levels for 10 of 12 months from August 1999 through July 2002. During this period commercial pork production was down 1.6%. But, commercial pork production wasn't down during the November 2002 to October 2003 period. It was up 0.6%.

The week began with very light supplies of retail pork cuts and allowed prices to appreciate slightly. By mid-week, demand declined drastically and supplies built which caused prices to slip lower. In spite of mostly moderate offerings, bone-in hams experienced light to moderate demand and lower prices although increased export demand provided additional support. Some processors continue to supplement ham production with frozen inventories due to limited availability of specific weight ranges. Although sliced bacon orders have increased slightly, seedless belly prices remain steady while demand and offerings continue to be light. Limited offerings this week pushed all pork trimmings higher while demand was light to moderate though most processors had good bought position.

Fresh loins 2.00-4.00 higher; Boston butts 2.00-9.00 lower; spareribs steady; skinned hams 17-20 lbs. 2.00 lower, 20-23 lbs. 3.00 lower, 23-27 lbs. 4.00-5.00 lower; seedless bellies 14-16 lbs. steady; 42% trimmings 1.00 higher, 72% lean trimmings 7.00- 8.00 higher; boneless picnic 4.00 higher; jowl steady.

The composite cutout- value of 51-52% 185 lbs. hog carcass was estimated at $67.90 per cwt. dn $0.25 from last Wednesday.

For the week grain bids were lower except soybeans which were moderately higher. Rains across the plains pressured wheat bids. Up to 1 inch of rain on Wednesday fell in some of the driest areas of the winter wheat region. Stormy weather starting in Texas and Oklahoma expected to move northeast ward through the Midwest. Good weekly exports sales added some support late in the week.

Corn was up and down all week only to close under negative territory. Disappointing weekly export sales, along with added pressure from the lower soybeans during the week kept corn bids from seeing day light. The weekly export sales came in at 395,000 tons.

Soybeans managed to close on top despite sharp losses early in the week. Weather in South America and technical buying helped beans rally. However, profit taking and bearish weekly export sales limit gains. Jan