CHICAGO – The CME Group, which serves as a global marketplace for a wide range of derivatives, including agricultural commodities, announced the formation of the new CME Fresh Bacon Index on May 13. The group is hoping the new index will provide price transparency for pork packers, processors, wholesalers and retailers.
US wholesale pork bellies prices continue to be volatile due to the African Swine Fever outbreaks in Asia and Europe, growing consumer demand and ongoing trade negotiations with China. According to CME, prices for pork bellies are the most volatile of all the pork primal cuts, with volatility peaking at more than 40 percent in 2018.
“As consumer tastes have evolved, bacon is now in demand year-round,” said Fred Seamon, CME’s executive director of agricultural research and product development. “We believe our Fresh Bacon Index can become the market-preferred bacon price reference. This new index will provide greater price discovery for market participants who need transparent bacon prices.”
The index will establish a weekly bacon price on Mondays based on a combination of negotiated and formula transactions available from the US Dept. of Agriculture. The price reflected by the Bacon Index is one load (40,000 lbs.) of fresh, skinless pork bellies in cents per pound.
The CME said its Fresh Bacon Index complements the group’s existing risk management tools and reference index prices for pork and hog industry participants, including Lean Hog futures and options, the CME Lean Hog Index and the CME Pork Cutout Index.