CME Group Tuesday announced plans to launch Pork Cutout futures and options. The new contracts are designed to give the U.S. pork industry and export markets tailored risk-management tools on the cutout.
Tim Andriesen, CME Group managing director of agricultural products, says, “As the market has evolved, our customers continue to look for new tools to manage the price risk associated with hog and pork production.”
Pending regulatory approvals, the Pork Cutout futures and options are slated to launch on November 9, and will be cash-settled to the CME Pork Cutout Index. The contracts will complement CME Lean Hog futures and options.
CME Group says hogs are increasingly bought and sold in the physical market based on a formula which uses the cutout. The Pork Cutout reflects the approximate value of a hog calculated using the prices paid for wholesale cuts of pork. The new contracts will be quoted in U.S. cents per pound and will have a contract size of 40,000 pounds.