Coverage: Pork belly prices hit a record high

Prices for the part of a hog used to make bacon have risen around 80 percent this year, while frozen reserves are at a six-decade low as Americans bought around 14 percent more bacon at stores in 2016 than in 2013.

Benjamin Parkin of The Wall Street Journal had the news:

“The consumer has simply woken up to the joy of having bacon on more and more things,” said Arlan Suderman, chief commodities economist at INTL FCStone in Kansas City, Mo.

Once considered a more unhealthy byproduct of a hog compared with prized cuts like pork chops and tenderloin, bacon has become a guilty pleasure amid a broader embrace of fatty meats. In the past decade, bacon has popped up on menus far from BLT’s and breakfast specials. The craze has gained pace this year.

Fast-food chain Arby’s Inc. last month introduced a series of “triple thick” bacon sandwiches. Brooklyn-based eatery Landhaus serves maple bacon on a stick. And bacon-themed summer festivals have sprung up in cities across the country.

“Everybody and their mother is coming out with a new bacon sandwich,” said Idaho livestock trader Dan Norcini.

Appetite for beef and bacon typically swells ahead of a July 4 and Memorial Day grilling boost. Wholesale beef prices followed that seasonal trajectory this year, falling from a mid-June peak.

Jeff Daniels of CNBC.com reported that restaurants may absorb some of the higher prices:

Cash prices for wholesale pork bellies, a cut of pork sliced to make bacon, are up 71 percent since the start of 2017 through Thursday, according to commodity research firm Urner Barry. On the retail side, it shows the weekly retail average for brand-level bacon was up 21 percent in the same period.

“Seasonally, this increase makes sense,” said RaboResearch analyst Steve Nicholson. “It’s grilling season, so if you’re making bacon cheeseburgers you have to have bacon.” Even more, it’s the season for bacon, lettuce and tomato sandwiches, he said.

In addition to the seasonal period of high demand, tightness in supplies of pork bellies have supported prices.

Pork bellies typically go into cold storage at the end of the year when there’s excess supply and lower demand. During the recent winter months, though, robust demand continued for both bellies and bacon so industry supplies were unable to get fully replenished.

Cheryl Day of National Hog Farmer noted that the country is not running out of bacon:

Consumers are devouring handcrafted food items, and pork bellies play nicely into that scene. Chefs are getting creative. Foodies are demanding more. And pork fits well into the scenario.

So, why the fresh high prices for pork bellies? It goes back to the elementary lessons of supply and demand. According to market analysis, pork bellies’ supply is tight. The latestCold Storage report by the USDA shows stocks of frozen bellies at a record low. Basically, the bacon stash is depleted, and it is time to restock the freezers.

Like all commodity markets, swings in prices are going to happen. What goes up must come down. For now, hog producers and market participants are just enjoying the ride, but hanging on tight.

Nevertheless, just because pork bellies supplies are tight today, it does not mean we are running out of bacon. Do not start that rumor. America’s pig farmers are doing an excellent job of raising more pork this year, as pork production is anticipated to grow by 3-4%. So, no matter if you enjoy bacon the good old fashion way, chocolate-covered or on top for an ice cream sundae, just keep eating it — America’s pig farmers will make more.