KANSAS CITY, Mo. — Fresh pork belly prices are at a record-high at $1.35 a lb.—a full 53% higher than they were one year earlier, according to a report published by The Wall Street Journal. At the same time, bacon demand peaks in summer months, when supermarkets heavily promote it to take advantage of a seasonal increase in Americans' consumption of bacon, lettuce and tomato sandwiches.
In 2008 and 2009, North American hog producers decided to cut their losses by trimming their herds; this move is now impacting cost pressures faced by supermarkets. Hog farmers were losing money due to high feed prices, a decrease in global demand in the wake of the recession, as well as panic surrounding the H1N1 influenza virus, which initially had been erroneously called "swine flu."
U.S. grocers placed bacon on sale at an average price of $2.76 a lb. during the past two weeks, 12 cents higher on year. Although pork processors and grocers have absorbed most of the increase in wholesale prices so far, it is probable retail prices will increase due to the surge in belly prices, which are up more than 60% since the beginning of 2010.
From August through early September, U.S.D.A. estimates hogs available for slaughter to be 5.4% lower. One advisory firm executive forecasts hog slaughter in August will be 7% lower on average at 2.040 million head a week. At the end of June, stockpiles of frozen pork bellies were at a record low at 35.4 million lbs.