Lean Hog Contract Specs:
Lean Hog Fundamentals:
Most hog production occurs in the Midwest. The largest hog producing states are Iowa, North Carolina, Minnesota and Illinois.
The U.S. is the world's largest pork exporter.
Normally, it takes six months to raise a pig from birth to slaughter.
Hogs are generally ready for market / slaughter when they reach a weight near 250 pounds.
More Lean Hog Fundamentals:
A market hog with a live weight of 250 pounds will typically yield 88.6 pounds of lean meat (Pork Facts 2001). This lean meat consists of an average of 21 percent ham, 20.3 percent loin, 13.9 percent belly, 3 percent spareribs, 7.3 percent Boston butt roast and blade steaks, and 10.3 percent picnic. The rest goes into jowl, lean trim, fat and miscellaneous cuts and trimmings (USDA AMS).
Pork bellies, which also trade a futures contract on the CME, are mainly used for bacon and can be frozen and stored for up to a year prior to processing.
Tips on Trading Lean Hog Futures:
Lean Hog Reports:
The Hogs and Pigs report is released quarterly. The hogs report presents data on the U.S. pig crop for the U.S., including inventory numbers and weights. The data shows the current supply situation and likely supplies in the future.
The CME Lean Hog Index is a two-day weighted average of cash prices.
- Ticker Symbol: LH
- Exchange: CME
- Trading Hours: 10:05 a.m. to 2:00 PM EST.
- Contract Size: 40,000 pounds.
- Contract Months: Feb, Apr, May, Jun, Jul, Aug, Oct, and Dec.
- Price Quote: price per pound. Ex $.5950 per pound or 59 and 1/2 cents
- Tick Size: $0.00025 or 2.5 cents per pound = $10.00 (0.00025 x 40,000 lbs).
- Last Trading Day: The tenth business day of the contract month.
Lean Hog Fundamentals:
Most hog production occurs in the Midwest. The largest hog producing states are Iowa, North Carolina, Minnesota and Illinois.
The U.S. is the world's largest pork exporter.
Normally, it takes six months to raise a pig from birth to slaughter.
Hogs are generally ready for market / slaughter when they reach a weight near 250 pounds.
More Lean Hog Fundamentals:
A market hog with a live weight of 250 pounds will typically yield 88.6 pounds of lean meat (Pork Facts 2001). This lean meat consists of an average of 21 percent ham, 20.3 percent loin, 13.9 percent belly, 3 percent spareribs, 7.3 percent Boston butt roast and blade steaks, and 10.3 percent picnic. The rest goes into jowl, lean trim, fat and miscellaneous cuts and trimmings (USDA AMS).
Pork bellies, which also trade a futures contract on the CME, are mainly used for bacon and can be frozen and stored for up to a year prior to processing.
Tips on Trading Lean Hog Futures:
- Hog prices seasonally tend to be highest between May and July.
- Watch the price of corn as that is mainly what hogs are fed. If the price of corn rises substantially, farmers will tend to take their hogs to market at lower weights (younger) to avoid the high feed costs. That typically causes lean hog futures prices to drop as more supply comes on line.
- You can estimate the future amount of hog production by monitoring the Hogs and Pigs Report. If the amount of newborn pigs are lower than previous quarters, it is likely the hog production will be lower six months later when they are ready for market.
Lean Hog Reports:
The Hogs and Pigs report is released quarterly. The hogs report presents data on the U.S. pig crop for the U.S., including inventory numbers and weights. The data shows the current supply situation and likely supplies in the future.
The CME Lean Hog Index is a two-day weighted average of cash prices.