A.G. EDWARDS & SONS, INC.
One North Jefferson, St. Louis, Missouri
314-955-3050
(March 9, 2000) PORK BELLIES: The USDA will release its next Cold Storage report on Monday, March 20. We expect the report to show pork belly stocks rose moderately, to 49 million pounds, during February. The chart compares the slow rise in stocks during the 1999-2000 storage season to last year and the 10-year average. The subdued rise experienced through fall and winter implies the May-June peak will also be relatively small. The low total, along with seasonally and cyclically reduced slaughter rates, will leave the market poorly prepared to meet surging summer demand.
Pork Belly Stocks
The spring-summer pork belly situation will probably be complicated by extremely strong demand. Strong buying of fresh product has been very apparent through fall and winter, and could easily persist through summer. Exports, high-protein diets and aggressive featuring by fast-food chains seem the most likely sources of the increased usage. We believe the export market could be upset by political interference, while domestic buying seems vulnerable to a fatigue factor. However, we believe traders should look for definite proof of such problems before being tempted to sell belly futures. With the quarterly Hogs & Pigs report looming on March 24, we strongly recommend the sidelines of the belly market.
Dan Vaught