CHICAGO — CME Group, which serves as a global marketplace for a wide range of derivatives, including agricultural commodities, announced that it would launch Pork Cutout futures and options on Nov. 9.
The group said the Pork Cutout will reflect the approximate value of a hog calculated using the prices paid for wholesale cuts of pork. Cuts and values used by CME will include the loin, butt, picnic, rib, ham and belly. The new contracts reflect the price of the wholesale product after processing.
“As the market has evolved, our customers continue to look for new tools to manage the price risk associated with hog and pork production,” said Tim Andriesen, managing director of CME Group’s agricultural products. “The Pork Cutout futures and options are complementary to our Lean Hog contracts and will provide clients with the ability to manage risk and discover price from the hog all the way to the meat case.”
The existing CME Pork Cutout Index will settle Pork Cutout futures and options. The index is a five-business day weighted average of prices reported by the US Department of Agriculture.
"The National Pork Producers Council (NPPC) welcomes the introduction of the new Pork Cutout trading vehicle," said Howard "AV" Roth, president of NPPC. "We applaud CME Group for providing another risk management option, in addition to the Lean Hog contract, and for enhancing market visibility, which is so important to maintaining a highly competitive and innovative pork production system in the United States."
New contracts will be quoted in US cents per pound and will have a contract size of 40,000 lbs.