Cold storage facilities across the U.S. have just hit record-high levels of pork bellies, the cut of the pig used to make bacon, reported Bloomberg. Much of the oversupply problem stems from farmers' increasing herd sizes ahead of a possible trade deal that was expected to occur earlier this year.
Farmers in 1H20 across Central and Midwest regions were desperately trying to increase herd sizes and or fields planted of corn and soybean because President Trump kept touting imminent trade deal in the press. What the farmers didn't realize is that there was no trade deal at the time, and the impending trade deal comments were only to boost the stock market. What this created was massive misguidance by the government that has led to shocking oversupplied conditions.
According to new U.S. government data published last week, there are more than 40 million pounds of pork bellies in cold storage facilities across the U.S. The levels are so high that some cold storage facilities could run out of space. The last time storage facilities saw this much pork belly was 1971.
Hog producers, listening to every trade headlines from the Trump administration, quickly expanded herds through spring and summer with the anticipation of an imminent trade deal with China. U.S. herd levels rose to 7.7 million heads as of Sept. 1, a level not seen since 1943.
While the massive overhang of pork bellies could be short-lived due to the anticipation of a "Phase 1" trade deal could be signed imminently between the U.S. and China, the lesson to be seen is that fake trade news has consequences, such as disrupting free markets and creating imbalances.