CME Pork Cutout futures and options (PRK) are specifically designed to give the pork industry tailored risk-management tools on the cutout. These contracts are cash-settled to the CME Pork Cutout Index and complement CME Lean Hog (HE) futures and options.
Key benefits
- A tool for hog producers, packers, processors, wholesalers, importers, and exporters to specifically tailor their risk management strategies around pork cutout values
- Allows the customer to monitor the spread differential between Lean Hogs and the Pork Cutout
- Available for screen trading on CME Globex and block trading via CME ClearPort
Source: United States Department of Agriculture (USDA)
Key contract features
At 40,000 pounds per contract, the Pork Cutout (PRK) futures and options contracts are equivalent in size to the existing Lean Hog (HE) futures and options. PRK futures and options are traded in U.S. cents per pound, with a tick size of $0.00025 per pound ($10 per contract). PRK is financially settled to the CME Pork Cutout Index. The contract months and trading hours align with the Lean Hog (HE) listings.
Spread trading
Access calendar spread trading and inter-commodity spread trading between Pork Cutout and Lean Hog contracts on both CME Globex and CME ClearPort. Margin offsets are also available
Understanding the pork cutout
Source: USDA
| Contract Title | Pork Cutout Futures | Options on Pork Cutout Futures |
|---|---|---|
| Contract Unit | 40,000 pounds | |
| Price Quotation | U.S. Cents per pound | |
| Trading Hours | CME Globex: Monday - Friday: 8:30 a.m. - 1:05 p.m. CT Pre-Open: 8:00 am – 8:29.59 am & 2:30 pm – 4:00 pm |
|
| Commodity Code | PRK | PRK |
| CME Rulebook Chapter | 156 | 156A |
| Contract months | Contracts listed for the months of February, April, May, June, July, August, October, and December | |
| Minimum price increments | $0.00025 per pound ($10 per tick) | Full Tick: $0.00025 per pound ($10) |
| Option Type | - | American |
| Strike Price listing procedures | - | Strikes listed for 50% of the underlying settlement price above and below the at-the-money strike at $0.02 per pound increments in all months and additional strikes listed for 25% of the underlying settlement price above and below the at-the-money strike at $0.01 per pound increments in the nearest 3 months. |
| Exercise procedure | - | Any business day that the option is traded until 5:30 p.m. CT |
| Termination of Trading | Trading terminates on the 10th business day of the contract month. | |
| Settlement Method | Financially settled to the CME Pork Cutout Index. | |
| Position Limits | 1,000 contracts net long or short in any single month. | |
| 350 contracts net long or short as of the close of trading on the fifth business day of the contract month. | ||
| Reportable Level | 25 contracts | |
| Block Trade Minimum | 5 contracts | |
| Block Trade Reporting Window | 5 minutes | 15 minutes |
| CME Globex matching algorithm | F: First In, First Out (FIFO) | |
Visit cmegroup.com/pork-cutout for more information about this product.
All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.
