It is generally believed that wild boars were the first animal to be domesticated as livestock, and that this process occurred simultaneously across the world approximately 9000 years ago. These domesticated boars were used for their hides and for their meat, providing people with clothes, food and other items of necessity. This tradition has endured to the modern day, with pig farming as important a part of society today as it ever has been. Various products from pigs are now part of the commodity trading network, such as lean hogs and pork bellies. Pork bellies originated as a commodity from the process of curing the meat for storage: most of the bacon sold in shops and supermarkets is made from belly pork. Pork bellies gained popularity in America as they were cheap and easy to transport, particularly with the introduction of the rail system, and their popularity is still high today.
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The pork bellies commodity has several features that make it appealing to traders of futures contracts. The most appealing of these features is the fact that there is incredible potential for demand for pork and pork futures to suddenly increase. It is believed that China and Japan, already massive pork consumers, will continue to increase their demand for pork. China in particular has massive potential, with more consumers set to increase the proportion of meat in their diet as wages continue to rise. This is good news for traders in the US, as the US is the primary exporter of pork bellies worldwide. Pork is generally considered to be the most consumed meat globally, and so it would seem that demand is only likely to increase. This makes it an incredibly lucrative prospect for those who trade in pork bellies commodities.
Pork Belly trading is carried out on several commodity exchanges, including The Dalian Commodity Exchange (DCE) and the Chicago Mercantile Exchange (CME). On the latter commodity exchange, frozen pork belly futures are traded under the ticker symbol of PB when they are traded at open outcry, and GPB when the pork belly futures are traded on an electronic platform.
The main consumer market for pork and pork bellies commodities is the domestic food market. China is the leading consumer of pork and pork products, and its industry barely produces enough pork to satisfy the demands of the Chinese people. Almost all of the pork produced in China is consumed in the country, so it must import pork and frozen pork bellies in from the other massive producer of pork: the United States.
There are several factors that one must consider when undertaking pork belly trading as pork belly prices can fluctuate wildly, as with most agricultural commodities. The general global trend for pork consumption is on the increase, but there can still sometimes be spikes in the pork bellies price when it is believed the demand for pork products will suddenly increase massively. The price by which one can obtain frozen pork bellies may also change depending on the season, as it is believed that people generally want to consume lighter meats in the summer months than in the winter months. Pork bellies can provide this light alternative in the summer, while perhaps not being as popular in the winter. This cyclical and mostly highly predictable cycle of popularity makes guessing the pork belly price and trading in pork bellies futures relatively easy to the experienced trader that researches present market conditions effectively.
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