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Investing in Lean Hogs and Pork Bellies via Futures Markets

You can invest in hogs in two ways: through a lean hog futures contract (which is a contract for the hog’s carcass), and through pork bellies (the traders’ way of saying “bacon”).

Investing in lean hogs

The lean hog futures contract trades on the Chicago Mercantile Exchange (CME) and is used primarily by producers of lean hogs — both domestic and international — and pork importers/exporters.

Here are the contract specs for lean hogs:

  • Contract ticker symbol: LH

  • Electronic ticker: HE

  • Contract size: 40,000 pounds

  • Underlying commodity: Lean hogs

  • Price fluctuation: $0.0001 per hundred pounds ($4.00 per contract)

  • Trading hours: 9:10 a.m. to 1:00 p.m. (Chicago Time), electronic and open outcry

  • Trading months: February, April, May, June, July, August, October, December

Perhaps no other commodity, agricultural or otherwise, exhibits the same level of volatility as the lean hogs futures contract. One of the reasons is that, compared to other products, this contract is not very liquid because it is primarily used by commercial entities seeking to hedge against price risk.

Other commodities — say, crude oil — that are actively traded by individual speculators as well the commercial entities are far more liquid and thus less volatile. If you are intent on trading this contract, keep in mind that you’re up against some very experienced and large players in this market.

Investing in frozen pork bellies

Physically, pork bellies come from the underside of a hog and weigh approximately 12 pounds. These pork bellies are generally stored frozen for extended periods of time, pending delivery to consumers.

As with most other livestock products, the Chicago Mercantile Exchange offers a futures contract for frozen pork bellies.

Here are the specs for the CME frozen pork bellies futures contract:

  • Contract ticker symbol: PB

  • Electronic ticker: GPB

  • Contract size: 40,000 pounds

  • Underlying commodity: Pork bellies, cut and trimmed

  • Price fluctuation: $0.0001/pound ($4.00 per contract)

  • Trading hours: 9:10 a.m. to 1:00 p.m. (Chicago Time), electronic and open outcry

  • Trading months: February, March, May, July, August

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