Requiem For Pork Bellies : Planet Money The life and death of pork-belly futures, explained by a trader in Chicago's meat pit.
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Requiem For Pork Bellies

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Requiem For Pork Bellies

Requiem For Pork Bellies

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It's the end of an era in Chicago. Trading on pork belly futures ended last Friday. So we thought we'd put together a little explainer, for those of you wondering there was a market for pork bellies in the first place. And we begin with a movie.


RALPH BELLAMY: (as Randolph Duke) Oh, William, my boy.

DON AMECHE: (as Mortimer Duke) Right on time. Come in. Come in.

NORRIS: That's "Trading Places" from 1983. Here, Eddie Murphy is ushered into a conference room ready for his new job as a commodities trader. At the table in front of him is coffee, eggs, bacon and toast.


EDDIE MURPHY: (as Billy Ray Valentine) No thanks, guys. I already had breakfast this morning.

NORRIS: But this isn't breakfast. This is money because these are commodities.


BELLAMY: (as Randolph Duke) Now, what are commodities? Commodities are agricultural products, like coffee that you had for breakfast, wheat which is used to make bread, pork bellies, which is used to make bacon - which you might find in a bacon and lettuce and tomato sandwich.

NORRIS: And as NPR's Zoe Chace reports, the bacon, lettuce and tomato sandwich used to power the entire Chicago Mercantile Exchange.

ZOE CHACE: I dialed up the meat pit at the Chicago Board of Trade. Brian Muno answered the phone.



CHACE: Hey, Brian. It's Zoe.

MUNO: Zoe, how are you?

CHACE: Despite his schmaltzy ringtone, Muno is unsentimental about the end of pork belly futures trading. Even though he started on the floor in the summer of 1975 - and his father had been a pork belly trader for 10 years already - that was the pork belly trading heyday.

MUNO: I mean there was more demand. You know, like in the late summer months when tomatoes would come in season, you know, people with BLTs.

CHACE: Muno says that in much the same way that eggs and toast are improved by bacon, so were the fortunes of the Chicago Mercantile Exchange.

MUNO: In the early '60s, we were primarily like a butter and egg exchange.

CHACE: In the mid-'60s, the Chicago Mercantile Exchange was looking for something more exciting to bet on than omelets. A product you could buy cheap, store, and then sell for a higher price.

MUNO: And they came up with bacon because they could store it. And it basically allowed the exchange to stay in business.

CHACE: Pork bellies were once the most popular product on the trading floor in Chicago. Traders would buy up shares of frozen pork belly slabs in Chicago warehouses. They'd then sell the bellies when demand for bacon was high.

MUNO: They're not going to drop them off in your front yard; they're going to be in a warehouse, in a frozen warehouse. But a lot of people figured, you know, if it cost them a dollar a pound to keep bellies in storage for a month, that if they could sell those March bellies a dollar and a half higher than they'd have to pay for them in February, that they could make 50 cents a pound by doing so.

CHACE: If anything, bacon is even more popular now than it was then. So why would trading on bacon end?

MUNO: Now the industry standard is more of a fresh belly. You know, once the hog is butchered, they take that belly and they're going to slice it right then.

CHACE: The meat industry changed. It became more efficient. Bacon producers wouldn't sell bellies that have been sitting in a warehouse for months. And financial products grew more complex; S&P futures, currency futures, interest rate futures edged out pork bellies in the '80s - though its death knell was Friday.

You also may have noticed that the demand for bacon is constant. It no longer changes with the season.

MUNO: Bacon on anything to me is good. Bacon cheeseburger, bacon pizza - that's just me.

CHACE: It's not just you.

Zoe Chace, NPR News.

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