The recent royal wedding celebrations at London’s Buckingham Palace featured bacon sandwiches on the menu for the morning after the night before.
The fact that bacon featured so prominently alongside other delicacies in such revered surroundings is quite fitting given that bacon prices are closing in on all-time highs and look set to continue pressing higher in the months ahead, a move that may elevate the slabs of pork belly from daily staple to a luxury treat.
Bacon is typically consumed at breakfast for most of the year, but is also included on lunch and dinner menus during the spring and summer months as a key ingredient in bacon, lettuce and tomato sandwiches and salads.
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Fast-food restaurants have also recently taken to piling bacon slices onto burgers and sandwiches as part of a movement that has seen bacon become an increasingly common ingredient on many menus.
And some retailers have even conjured new ways to consume bacon, with breakfast chain Denny’s serving a Maple Bacon Sundae as part of its “Baconalia” promotion – a 10-week “Celebration of Bacon.”
But with prices more than 25 per cent above year-ago levels and rising, bacon may start to become more of a luxury item than a mealtime staple, and start to scale back its omnipresence on menus across the United States.
Hog prices have recently scaled their highest level ever amid low herd sizes and high-priced feeds such as corn and soymeal. Tight credit availability and an uncertain outlook for key feed ingredients are keeping hog breeders from expanding herd sizes, further underpinning hog and pig-product prices.
Meanwhile, inventories of pork bellies – bacon’s source – are at multi-year lows as retailers balk at buying and storing the meat at its present elevated prices.
The result is a potent combination of slow herd expansion and low frozen belly inventories, which looks set to continue steering bacon prices higher over the coming months.
Despite the persistent strength in hog prices over the past several months, U.S. hog producers have proved reluctant to expand hog production given the high expense of animal feeds.
The latest data shows that sow farrowings were at their second lowest in a year in February, while the slaughtering of sows reached its highest in a year in March – implying that producers find it more attractive to slaughter sows for meat rather than keep them to rear more pigs.
A somewhat similar story is unfolding in the cattle industry, which also faces historically high feed ingredients that have limited herd expansion in recent months.
But in contrast to the declining hog numbers, cattle production has been increasing in recent weeks to generate expectations for higher beef output in the coming months.
Sirloin-bacon spread narrows
This in turn has served to weigh on retail beef prices lately, and help narrow the spread between sirloin steak and bacon prices to its lowest in more than 10 years.
This narrowing in the price
differential between bacon and sirloin steak has set the stage for potential substitution between those two products in due course should the price of bacon continue to accelerate higher.
The recent downward bias in poultry prices – such as boneless chicken breasts – also reveals that carnivores may have more economical options at the meat counter and on restaurant menus should bacon prices stay high.
But even here the price of whole chickens is hovering close to all-time highs, suggesting that while consumers may have some substitutability between cuts and types of meat, the overall price of meat itself continues to press higher.
In all, bacon prices look set to stretch to record highs in the coming weeks and months as high hog prices and low pork belly inventories spur retailers to pass on rising costs to consumers. Given that the prices of nearly all popular meats are also on the rise, bacon’s climb to record levels may help push that product from the status of a daily staple to the realm of an occasional luxury – and may alter the ingredient lineup of key spring and summer menu items across the country.
