CME Group’s New Pork Contracts Launching in November

CHICAGO, IL – Last week, the CME Group announced the launch of a new cash-settled pork cutout contract. The new contract is intended to be complementary to existing lean hog contracts and aims to provide market participants with the ability to manage risk from the live animal through the meat case. Pork is the most widely consumed protein in the world and U.S. hog farmers produce more today than ever. Advances in technology and production efficiency contributed to a new record of 27 billion pounds produced last year, a 44 percent increase compared to production at the turn of the century. With the increasing number of hog transactions utilizing the pork cutout as part of a formula transaction, these contracts have the potential to develop into an important risk management tool for industry participants. The timing of this announcement coincides with a rising pork cutout value and offers an opportunity to revisit what exactly the pork cutout is and how it is calculated. This is the first major pork-related contract launched by the CME Group since delisting the iconic pork belly futures market back in 2011 – after 50 years of trading. The new CME Group Pork Cutout Futures and Options contracts will launch in November.
(SOURCES: American Farm Bureau Federation and CME Group)