CME Group, the world's leading and most diverse derivatives marketplace, announced May 13 that it has begun publishing a new "CME Fresh Bacon Index" to establish a transparent price reference for fresh pork bellies used to make bacon.
According to the announcement, 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 more than 40% in 2018, CME said.
"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 in order to track the supply and demand dynamics of bacon transacted on the cash market, CME said.
The index establishes a weekly bacon price each Monday based on a combination of negotiated and formula transactions that are readily available from the U.S. Department of Agriculture. The CME Fresh Bacon Index price reflects the value of one load (40,000 lb.) of fresh, skinless pork bellies in cents per pound.
The CME Fresh Bacon Index will complement CME'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, the announcement said.
More information on the CME Fresh Bacon Index is available at www.cmegroup.com/baconindex.