August 4, 2010

Rising US pork bellies prices hit all-time high

A crispy rasher of bacon is becoming an increasingly costly indulgence in the US, as pork demand surges and cutbacks in farmers' swine herds have pushed the price of pork cuts to an all-time high.

On the CME, the cost of pork bellies, which are used to produce bacon, has risen by more than 65% in the last 12 months and the wholesale price of pig product hit US$1.35 per pound last week-its highest on record.

Analysts say farmers reducing pig herds during the recession, together with swine flu and high feed prices, took their toll. Meanwhile, demand is on the up as consumers trade down to bacon from more expensive meats, while seasonal use reaches a summer peak.

The surging commodity price has found its way into US supermarkets. The Bureau of Labour Statistics reported last month that retail prices for sliced bacon reached a 30-year high of US$4.04 per pound in US cities in June, an increase of 18 cents on the previous month.

British bacon fans are feeling less of a squeeze. Most British pork is either domestically produced or imported from Denmark. BPEX, which tracks the pork market in Britain, said prices had been rising this summer but were still below last year's peak. In the four weeks to May 16, British consumers spent GBP93 million on bacon, up 9% year-on-year.

In the US, pig farmers suffered two consecutive years of losses as grain rocketed in cost and swine flu took hold-causing a dip in consumer demand despite no scientific risk of human contagion, plus a ban on US pork exports to China.