Low Pork Belly Stocks Spark Sharp Price Boost

Low inventories of pork bellies this year have sparked sharp increases in prices as restaurants around the country pile on the bacon for added flavor.

Frozen belly stocks are very seasonal and tend to begin the year rather large then dwindle into the summer months, said the Livestock Marketing Information Center’s Livestock Monitor.  However, this year, they were at their lowest level on record for the end of January, going back at least 40 years, and prices have spiked.

This has been a focus for the pork market and even the general media.

Meanwhile, the rest of the pork market has proceeded in a routine manner based on expectations driven by USDA estimates of the hog and pig population on Dec. 1.

At that point, the US hog population was estimated to be up 4% from a year earlier (a bit of an upside surprise, the LMIC said), with the breeding herd up 1% and market hog numbers up 4%.

Inventories of hogs destined for slaughter weighing more than 180 pounds were pegged to be up 2% from a year earlier, giving a perspective on what to expect for pork production during the first 90 days of 2017.




The wholesale value of pork bellies started the year at $1.16 per cwt, up $0.12, or 11.5%, from $1.04 a year earlier.

The USDA’s National Agricultural Statistics Service released the estimate of low end-of-the-year frozen pork belly inventories on Jan. 24.  The day before the report, pork belly values were $1.41 per cwt.  A week after the report, values had jumped to just over $1.70.

Since then, belly prices have moved even higher.  According to NASS estimates last week, belly inventories had eroded during January.




Hog prices have followed a smoother path than bellies since the first of the year, starting at about $52 per cwt, on a national average, dressed carcass, producer-negotiated base price.  Late January hog carcass prices appreciated $10 from the start of the year and were up another $10 through February.

January pork production was up 3% from a year earlier, not too far from the 2% increase in heavy market hog inventories on Dec. 1.  There was one additional weekday for slaughter operations this January than a year ago but one less Saturday.

January barrow and gilt slaughter was up 4% from the prior January while average carcass weights were one pound lighter, or about 0.5%.

Sow slaughter during the month was up 5% from January 2016.  The advance in hog prices along with the additional production compared to a year ago makes a favorable statement about the effect of rising pork belly prices and consumer demand for pork, in general, the LMIC added.




Cash cattle prices were higher Wednesday.

Average fed cattle exchange auction prices Wednesday were $2.88 per cwt higher at $124.99, versus $122.11 a week earlier.  Cash cattle trading was reported at $124.50 to $125.50 per cwt on a live basis, compared with the previous week at mostly $124 to $125.  No dressed-basis trading was reported, but sellers were passing bids of $195 to $196, compared with $195 to $196 last week.

The USDA’s choice cutout Wednesday was up $1.85 per cwt at $206.58, while select was up $1.52 at $202.87.  The choice/select spread widened to $3.71 from $3.38 with 100 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Tuesday was $127.03 per cwt, up $0.05.  This compares with Wednesday’s Mar settlement of $124.50, down $0.57.