Consumers facing record prices for bacon

Back to TopCommentsE-mailPrintBookmark and Share

Bacon lovers in the U.S. are paying record prices during the seasonal summer peak for consumption, and costs may keep rising through August because smaller hog herds led to an unprecedented plunge in meat inventories.

Wholesale pork bellies, which are cured and sliced to make bacon, are up 72 percent in the past year, to $1.4308 a pound, the highest price since at least 1998, government data show. Stockpiles in warehouses monitored by the Chicago Mercantile Exchange tumbled 73 percent in the year through July as U.S. hog producers cut their herds to stanch losses in 2008 and 2009.

Prices usually climb in August, when tomatoes are ready for harvest in the Midwest and more people eat bacon, lettuce and tomato sandwiches, said Altin Kalo, a commodity analyst for Steiner Consulting Group. While pork bellies will probably fall later this year as demand slows, the costs will be records for each month through year-end because of tight supplies, he said.

“What you have with bacon is what economists call inelastic demand, meaning it doesn’t vary much,” said Chris Hurt, a livestock economist at Purdue University in West Lafayette. “If a person wants a BLT sandwich and likes that in summer when their patio tomatoes come on, then it doesn’t make a difference if bacon is $2 a pound or $6 a pound. They’re going to go out and buy it. When it’s in short supply and a lot of people want it, they’ll pay a higher price.”

The U.S. consumes more than 1.7 billion pounds of bacon annually at restaurants and other food service companies, the National Pork Board said in May. Bacon is the second fastest-growing pork item in food service, behind ground pork, the Des Moines, Iowa-based trade group said. Only China and the European Union eat more pork than the U.S.

While overall food inflation is forecast to rise 1.5 percent to 2.5 percent this year, pork’s rally has fueled a bigger-than-expected jump in retail meat prices, which have gained 6.1 percent since the end of December, U.S. Department of Agriculture data show.

On the Chicago Mercantile Exchange, pork-belly futures for August delivery jumped the exchange limit for a second-straight day Tuesday, climbing 3 cents, or 2.8 percent, to $1.095 a pound, the highest level since July 2004. The most-active contract has surged 77 percent in the past year.

Expectations of improved pork profit led Farha Aslam, an analyst at Stephens Inc. in New York, to raise her earnings estimate for meat-processor Tyson Foods Inc. to 60 cents a share for the quarter ended in June, up from 56 cents.

Meatpackers and retailers were caught short of supply this year after surpluses sent prices plunging in 2009, Kalo said from Manchester, N.H. Wholesale-pork prices tumbled to a six-year low in August 2009, as an outbreak of swine flu sapped exports and U.S. demand waned because of the recession.

“We’re always fighting last year’s battles,” said Kalo, whose company consults for food retailers and processors. Users “got caught with a lot of inventory around last year, and then demand got a bit soft, and we saw prices of bellies drop. This year they weren’t as aggressive in storing it.”

Nationwide pork-belly inventories peaked this year in March at 58.76 million pounds, USDA data show. That’s 26 percent less than the high in 2009, reached in April, of 79.54 million pounds.

Wholesale pork bellies may remain near current record prices until the end of August, before dropping to an average of $1.17 a pound in September, Kalo said. That would still be 77 percent higher than in September 2009, and would mark the highest average price ever for the month.

Kalo expects that monthly average pork-belly prices will top year-over-year records through December.

The U.S. hog-breeding herd is near the smallest on record, after pork producers lost about $6 billion from late 2007 through early 2010, according to University of Missouri data. Total hog inventories on June 1 dropped 3.6 percent from a year earlier, to 64.4 million animals, the USDA estimates.

The available supply of hogs to slaughterhouses tends to be the tightest of the year during July and August, Kalo said. Hot weather curbs weight gains, so animals have to spend more time on feed getting heavy enough for slaughter, he said.

Lawrence Kane, a livestock-market adviser at Stewart- Peterson Group in Yates City, Ill., said demand for pork bellies is “solid” in the U.S.

“Price may not be a real major factor to a lot of people,” Kane said. “My wife said it was $5.99 a pound for bacon at the grocery store the other day. But she bought two packages instead of one, so we’ll have it on another night.”

Retail bacon prices in the U.S. averaged $4.046 a pound in June, the highest since at least 1980, according to the Bureau of Labor Statistics.


Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
You are legally responsible for what you post and your anonymity is not guaranteed.
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
Subscribe to IBJ
  1. Of what value is selling alcoholic beverages to State Fair patrons when there are many families with children attending. Is this the message we want to give children attending and participating in the Fair, another venue with alooholic consumption onsite. Is this to promote beer and wine production in the state which are great for the breweries and wineries, but where does this end up 10-15 years from now, lots more drinkers for the alcoholic contents. If these drinks are so important, why not remove the alcohol content and the flavor and drink itself similar to soft drinks would be the novelty, not the alcoholic content and its affects on the drinker. There is no social or material benefit from drinking alcoholic beverages, mostly people want to get slightly or highly drunk.

  2. I did;nt know anyone in Indiana could count- WHY did they NOT SAY just HOW this would be enforced? Because it WON;T! NOW- with that said- BIG BROTHER is ALIVE in this Article-why take any comment if it won't appease YOU PEOPLE- that's NOT American- with EVERYTHING you indicated is NOT said-I can see WHY it say's o Comments- YOU are COMMIES- BIG BROTHER and most likely- voted for Obama!

  3. In Europe there are schools for hairdressing but you don't get a license afterwards but you are required to assist in turkey and Italy its 7 years in japan it's 10 years England 2 so these people who assist know how to do hair their not just anybody and if your an owner and you hire someone with no experience then ur an idiot I've known stylist from different countries with no license but they are professional clean and safe they have no license but they have experience a license doesn't mean anything look at all the bad hairdressers in the world that have fried peoples hair okay but they have a license doesn't make them a professional at their job I think they should get rid of it because stateboard robs stylist and owners and they fine you for the dumbest f***ing things oh ur license isn't displayed 100$ oh ur wearing open toe shoes fine, oh there's ONE HAIR IN UR BRUSH that's a fine it's like really? So I think they need to go or ease up on their regulations because their too strict

  4. Exciting times in Carmel.

  5. Twenty years ago when we moved to Indy I was a stay at home mom and knew not very many people.WIBC was my family and friends for the most part. It was informative, civil, and humerous with Dave the KING. Terri, Jeff, Stever, Big Joe, Matt, Pat and Crumie. I loved them all, and they seemed to love each other. I didn't mind Greg Garrison, but I was not a Rush fan. NOW I can't stand Chicks and all their giggly opinions. Tony Katz is to abrasive that early in the morning(or really any time). I will tune in on Saturday morning for the usual fun and priceless information from Pat and Crumie, mornings it will be 90.1