May 13, 2020

US analysts: Low pork belly inventories doesn't equal bacon shortage

American analysts believe there will be more bacon supply even as the country's pork belly inventories record two straight months of record low numbers, reported Reuters.

The Ohio Pork Council reported that pork belly supply is at its lowest in 50 years in February, creating a media frenzy even though the council clarified there is no bacon shortage.

Data from the US Department of Agriculture (USDA) showed pork belly stocks are currently at 14 million pounds, down 4 million pounds from December last year. The five year average for pork belly stocks is a 6.6. million-pound gain.

Analysts in the industry said the low pork belly stocks are due to increased bacon demand and speculators reducing physical storage for the product after the Chicago Mercantile Exchange belly trading pit was abolished.

Fresh pork belly is readily available and surging prices for the product could have discouraged processors from storing them.

Dan Vaught, an economist at Doane Advisory Services said demand for pork and bacon rose in late-2019, possibly because consumers bought surplus for storage. He added that the USDA isn't projecting a shortage.

Vaught referred to a swine report from the government that showed swine slaughter numbers increased 4% through the spring.

Bacon in January was priced at US$5.18 per pound in the country's monthly retail data. This is an 8-cent increase from December, but a reduction of 47 cents compared to one year ago.

-      Reuters