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CME Lean Hog Contract Replaces Live Hog Contract
Livestock Update, February 1997
Cindy Wood, Animal and Poultry Sciences
With settlement of the December 1996 Live Hog contract, the Chicago Mercantile
Exchange (CME) switches completely to the Lean Hog contract. There were
several reasons for the change, not least being that 70 % of hogs are sold
now on a grade and yield (carcass merit) basis. There are a number of differences
between the two contracts, although the abbreviation (LH) will remain the
same. Differences include
Lean Hog Contract Specifications
- cash settlement to a "Lean Hog Index", meaning that the futures price
will converge to the index;
- prices represent a lean value versus a live value;
- contract consists of 40,000 pounds of carcass instead of live weight;
- contracts expire the 10th business day of month;
- options expire same day as futures contract;
- no price limit the last two days of trading
The Lean Hog Index is a two-day weighted average of lean hog values collected
by USDA from the Western Cornbelt, Eastern Cornbelt, and MidSouth regions.
Need more information?
Chicago Mercantile Exchange
30 South Wacker Drive
Chicago, IL 60606-7499
FAX: (312) 466-4410