Chicago’s iconic 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-tomato sandwiches.
The Chicago Mercantile Exchange shut down the frozen pork belly futures market at the end of business on Friday, July 15.
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 CME 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-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 following summer when they were thawed and processed into bacon, said long-time Chicago trader Bob Short,
“The name sounded attractive. Nobody knew it was bacon. It made people laugh,” 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 CME’s most popular agriculture 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 CME since 1968.
He worked summers for his uncle Vincent Kosuga starting in 1968 and in 1971 became a CME member.
“That was probably biggest traded commodity at the floor of the CME. 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 Paffenroth.
Stand-up comedians of the 1960s, ’70s and ’80s were quick to latch on to the pork belly contract whenever they joked about financial markets.