"The new open interest records indicate the value of our lean hog contract among a wide spectrum of market participants," said Terry Duffy, Vice Chairman of the CME Board and a member of the Lean Hog Committee. "With the upcoming launch of an E-mini lean hog contract, which is sized at 10,000 pounds, we hope to further expand the range of market participants."
Each lean hog contract represents 40,000 pounds of dressed hogs and is 51 percent to 52 percent lean. The CME introduced the successful lean hog contract in 1995 in response to customer demand to have a contract that better reflected the prices that producers get for their animals. The exchange announced on March 2 that it will begin trading an "E-mini" lean hog contract - the first agricultural commodity to be traded on the CME's GLOBEX®2 electronic trading system.
The lean hog contract is cash-settled to the CME Lean Hog IndexTM, a two-day weighted average of USDA Lean Value Direct Hog Trade prices from the major hog producing regions in the United States. The settlement price is calculated on the business day following the last day of trading.
The new open interest record also surpasses the record for live hog futures, which traded on the CME from 1966 to 1995. That contract, for 30,000 pounds of live animals, saw record open interest of 68,393 on June 3, 1982.
The Chicago Mercantile Exchange offers a variety of futures and options products on livestock, dairy and forest products. As part of its agricultural complex, the CME trades contracts on live cattle, feeder cattle, stocker cattle, boneless beef and beef trimmings, lean hogs, pork bellies, pork cutout, milk, butter, cheddar cheese, nonfat dry milk, dry whey, lumber and oriented strand board.
