Bacon lovers in the U.S. are paying record prices during the seasonal summer peak and costs may keep rising through August, according to a Bloomberg report.
Wholesale pork bellies are up 72 percent in the past year to $1.4308 a pound, the highest price since at least 1998, government data show. 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.
Stockpiles in warehouses monitored by the Chicago Mercantile Exchange tumbled 73 percent in the year through July as U.S. pork producers cut herds to stanch losses in 2008 and 2009.
Prices usually climb in August, when tomatoes are ready for harvest in the Midwest and many 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, Indiana. “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 (771,100 metric tons) 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.
The world’s largest per-capita pork consumer is Hong Kong, where each person is expected to eat 151 pounds this year, according to the U.S. Department of Agriculture. On a per-capita basis, the U.S. ranks 10th, at about 60 pounds annually.
On the CME, pork-belly futures for August delivery jumped the exchange’s 4.5-cent limit, or 4.1 percent, to $1.14 a pound Wednesday, the highest level since July 2004.