Pork: Trading
Lean hog futures, and the wild pork belly contract that vanished
What this tab covers How and where it is bought and sold: who buys and sells, exchanges and benchmarks, contract types, the big trading houses and how prices are discovered.CME lean hog futures are cash-settled against a USDA price index; Geman describes a 40,000-pound carcass contract (pdf p. 172). The pork belly contract, once known for limit moves and heavy speculation, has since been delisted. Morgan records belly prices swinging sharply in 1976 with no change in supply (pdf p. 454). China's Dalian Commodity Exchange launched live hog futures in 2021. Packers mostly buy hogs on formulas linked to these prices, and Europe uses national reference prices.
Where it is bought (buyers)
- Packers buy finished hogs from contract and independent farms on formula or negotiated prices, often linked to the CME Lean Hog Index
- Importers and processors in Japan, Mexico, China, South Korea, the UK and the Philippines buy frozen and chilled cuts and offal by the container
- Retailers and food-service chains buy boxed pork and packaged meats under annual or quarterly programmes
Where it is sold (sellers)
- US, EU (Spain, Germany, Denmark), Brazilian and Canadian packers export cuts and offal
- Chinese corporates such as Muyuan and Wens sell live hogs and fresh pork mainly into the domestic market
Exchanges and benchmarks
| Venue | Contract | Notes |
|---|---|---|
| CME | Lean Hog futures, 40,000 lb, cash-settled on the CME Lean Hog Index | global reference for hog prices; frozen pork belly futures were delisted |
| Dalian Commodity Exchange | Live hog futures, yuan per tonne | China's benchmark for hedging hog prices |
| India | none | no Indian exchange lists pork or hog futures |
Contract types
- Formula pricing for hogs tied to the USDA-based lean hog index
- Production contracts in which packers supply pigs and feed and pay growers a fee
- Container-lot export contracts for frozen cuts, typically CFR destination port
- Supply programmes with retailers for packaged meats
Top trading houses
- Packer-exporters trade directly (Smithfield, Tyson, JBS, Danish Crown); meat importers and distributors in Asia and Mexico handle much of the import side
How prices are discovered
- CME Lean Hog futures and index
- USDA Agricultural Marketing Service national daily hog and pork reports
- Dalian live hog futures and China's national average live hog price
- European Commission pig meat market observatory prices