I just finished placing an order with my broker and that got me thinking about somethiing I’ve never understood - I Why is there a commodity market for Pork Bellies? Is this just a euphemism for hogs in general? If not, what is it about pork bellies that I’m missing out on? Are they that tasty?
The CBOT site was not helpful on this issue, even though the FAQ Section did answer a few of my other questions.
On a related note - Did anyone else see the American Experience show on the Rockefeller family? Amazing, eh? The old man had a full 2% of the wealth of the ENTIRE FUCKING COUNTRY at one point. One man with 2% of all the wealth. Amazing. Truely amazing.
I’ve thought about this too. No doubt we’ll get someone who works in the wild and wacky world of the financial markets posting to give us a definitive answer but, in the meantime, my two cents: I think it’s bacon. Like other commodities traded, coffee, orange juice, bacon is a huge volume, vastly consumed product.
I could have sworn Cecil did a column on this, but I can’t find it. It is my understanding that the belly is the part that bacon is made from. It is important to understand that “belly” does not mean “stomach” (no more in hogs than in people). The belly of a hog is the cut of meat from the underside of the animal, from about the middle of the animal to the area between the legs.
The wild ass guess is correct. Pork bellies is the area used to make bacon. Frozen pork bellies travel well. It is a very widely used commodity, therefore one of the most commonly traded.
Ah pork bellies. I rember as a wee tyke at dinner we would watch the nightly buisness report on PBS. My favorite part was when they said the price of pork bellies. I have always thought pork bellies were better than light sweet crude as funny named commodities go.
We seem to have a difference of opinion here: Some say “just the bacon making parts,” one says the whole carcass minus the nasty stuff. Thanks for clearing that up for me.
It wouldn’t be. CBOT is the market for crop futures (wheat, soybeans, corn, etc.). Chicago Mercantile Exchange – http://www.cme.com – deals in livestock (hogs, cattle, etc.) and lumber futures. Both markets involve financial (bonds, stock indexes, etc.) futures.
Yes, there are two completely separate futures exchanges in Chicago. If New York can have the NYSE and AMEX stock exchanges, we can have CBOT and CME.
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As an aside, my local currency, the Australian dollar is, unfortunately and largely erroneously, designated as a commodity currency, and hence tends to rise and fall in value on the currency markets based on Chicago Futures Exchange prices for corn, soyabeans and sow bellies.
This is rather galling as Australia’s production of these commodity staples of the US agro-economy is negligible.
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Ummm, so we have the physical part of the pig that satisfied folks are buying, but I think there’s another level at play here. Pork bellies don’t have much meat on 'em, but in a market where everyone’s beyond their necessary hunger, they serve as extra larder in the cupboard. IE, you have some room to play with the market a bit, but yer pretty safe if ya got fat pigs.
I heard somewhere, many years ago (from where I don’t remember anymore, unfortunately) that someone in Chicago, in order to goose up interest in futures trading, added pork bellies because he noticed that their prices fluctuated enough to make a futures market in them a profitable enterprise. I remember that this was some time in the early 60’s.
Someone out there must know the complete story…
Where did you hear that about those particular commodities?
I (and all of the people here at work who I just questioned about it) have never heard that the AUD price is related to the prices of corn, soyabeans or sow bellies.
Our (Australia’s) main commodity production is in the areas of wheat, coal, wool, copper, iron ore etc.
Over the very long term the commodity which most closely tracks the level of the Aussie dollar is copper.
And more broadly, why do you think it is erroneous to say that the Aussie is a Commodity Currency?
