Pork-belly futures extended a rally to a record on signs that U.S. supplies are trailing consumer demand for bacon. Hog and cattle futures dropped.
Stockpiles of pork bellies in warehouses monitored by the Chicago Mercantile Exchange were 73 percent smaller at the end of July than a year earlier. Wholesale prices have surged 84 percent this year, touching a record $1.4308 a pound on Aug. 3, U.S. Department of Agriculture data show. Pork bellies are cured and sliced to make bacon.
“The amount of pork in the coolers is pretty tight, so that is a concern,” said Christian Mayer, a market adviser at Northstar Commodity Investments Co. in Minneapolis. Demand for pork, which is cheaper than beef, has increased during the U.S. economic decline as more people seek lower-priced food, he said.
Pork-belly futures for August delivery rose by the CME’s daily limit of 4.5 cents, or 3.8 percent, to close at $1.23 a pound at 1 p.m. That marked the highest price ever for a most- active contract since the CME began trading the commodity in September 1961. Prices jumped by the exchange’s limit every day this week, gaining 19 percent over five days.
U.S. bacon demand tends to peak in August, as tomatoes ripen in the Midwest and more consumers eat bacon, lettuce and tomato sandwiches, analysts said.
Hog futures for October settlement slid 1.95 cents, or 2.6 percent, to 74.075 cents a pound. Futures tumbled by as much as the CME’s 3-cent limit yesterday on concern that a 59 percent increase in wholesale-pork prices over the past year will erode U.S. grocer demand, Mayer said. Hog futures fell 6.3 percent for the week.
U.S. meatpackers shipped 10.4 million pounds (4,717 metric tons) of pork in the first four days of this week, 37 percent less than in the same period last year, according to USDA data. A wholesale-price gauge that includes pork bellies, hams and other cuts, has declined 1 percent since reaching an 11-week high on Aug. 3.
“Definitely, the pork movement has slowed down, because you did hit some of the highest prices of the year,” Mayer said. “You can’t say we’ve officially topped out yet, but if we haven’t, we’re probably getting close.”
Cattle futures for October delivery fell 0.775 cent, or 0.8 percent, to 95.5 cents a pound, the first decline in three days, trimming this week’s gain to 1 percent. Feeder-cattle futures for September settlement dropped 0.425 cent, or 0.4 percent, to $1.1225 a pound.
A slowing U.S. economy may signal beef demand will slump, pressuring cattle prices, Mayer said. Private companies added 71,000 jobs last month, the Labor Department said today, fewer than economists had estimated.