August 16, 2022

Pork Belly Futures Market Closes, but We’ll Still Have Bacon

CHICAGO, July 15 (Reuters) — Chicago’s pork belly market has closed after 50 years of being the subject of jokes for movies and TV shows and satisfying Americans’ hunger for bacon, lettuce and tomato sandwiches. The Chicago Mercantile Exchange said it shut the frozen pork belly futures market at the end of business on Friday.

The closing had been expected. Trading in pork belly futures had dropped to zero in recent years after the meat industry became integrated and used fresh pork bellies instead of frozen ones to make bacon.

The contract started trading in 1961 and was the oldest existing Chicago Mercantile Exchange livestock futures contract.

Pork bellies, as the name indicates, are cuts of pork that come from the underside of the hog and are made into bacon. Demand for pork bellies and bacon increases in the summer, when tomatoes ripen and people make bacon, lettuce and tomato sandwiches.

Because pork production peaks in the autumn, the frozen pork belly contract was created as a way to give pork companies a means to cover the cost of storing, or freezing, pork bellies until the next summer, when they were thawed and processed into bacon, said a longtime Chicago trader, Bob Short.

“The name sounded attractive. Nobody knew it was bacon. It made people laugh,” Mr. Short said.

“We primarily traded the pork belly market until about five to seven years ago, when there was then no one to trade with, so we quit,” he said.

Pork bellies had their heyday in the late 1960s and 1970s, when they were the exchange’s most popular agricultural contract.

“The glamour market was the pork bellies. There was a mystique about it. Maybe it was the name,” said Harvey Paffenroth, who has been at the Chicago Mercantile Exchange since 1968.

“That was probably the biggest traded commodity at the floor of the C.M.E. They had potatoes, eggs, cattle and hogs. Cattle was a pretty good-sized contract, but it wasn’t as big as the pork bellies,” said Mr. Paffenroth.

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