000429 Pork Up on Bacon Demand

Chicago - Soaring demand for bacon and resulting low supplies helped push pork belly prices close to their highest level since 1996 on the Chicago Mercantile Exchange.

In other markets, crude oil rocketed 5% higher, taking other energy commodities with it, and coffee ground to a six-month low.

With bacon's growing popularity prompting higher demand for pork bellies - its source - market-watchers had anticipated that cold-storage warehouses would be stocking up with the spring and summer barbecuing season fast approaching.

Not so. Pork belly supplies in warehouses monitored by the Chicago exchange rose by just 1,000 pounds last week, according to a report released after the close of Tuesday's trading. Analysts had forecast an increase of anywhere from 500,000 to a million pounds.

That spurred a belly-buying frenzy in the pork pits Wednesday morning. Frozen pork bellies for May delivery rose the exchange's trading limit of 3 cents to close at 95.67 cents a pound - just another similar rally away from prices last seen in August 1996.

“Obviously the market was a little shocked at that (supply) situation,” said analyst Chuck Levitt of Alaron Trading Corp. in Chicago.

Only a comparatively modest 60 million pounds of bellies were on hand at the nation's warehouses as of March 31 - down a whopping 46 million pounds from last year at this time and 8.4 million pounds below the five-year average.

Tight storage supplies come at a time when bacon is being added to more and more hamburgers and sandwiches sold by restaurant chains nationwide - partly to improve the taste of beef being cooked longer to guard against the deadly E. coli bacteria.

“Bacon is being sucked through the pipeline,” said Levitt. “The fast-food industry demand for bacon has been phenomenal.”

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