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Bacon is back: CME Group launches new, fresh bacon index

CME Fresh Bacon Index to provide transparent price reference for fresh pork bellies used to make bacon

14 May 2019, at 12:28pm

CME Group, the world's leading and most diverse derivatives marketplace, today announced it has begun publishing a new CME Fresh Bacon Index to establish a transparent price reference for fresh pork bellies used to make bacon. This new index comes amid significant bacon price volatility driven by rapidly growing consumer demand, global trade disputes and disease. Prices for pork bellies are the most volatile of all the pork primal cuts, with volatility peaking at over 40 percent in 2018.

"As consumer tastes have evolved, bacon is now in demand year-round," said Fred Seamon, CME Group 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 new index will provide producers, packers, processors, wholesalers, foodservice, retailers and others across the bacon supply chain with a transparent weekly price to track supply and demand dynamics of bacon transacted on the cash market. The index establishes a weekly bacon price each Monday based on a combination of negotiated and formula transactions, readily available from the USDA. The CME Fresh Bacon Index price reflects the value of one load (40,000 pounds) of fresh, skinless pork bellies in cents per pound.

The CME Fresh Bacon Index will complement CME 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.