Lean Hogs futures (HE) at CME Group allow you the opportunity to profit from or hedge against the price movements of this meat.
Hogs give birth to large litters and can grow to a slaughter weight of 250 pounds in a mere six months. A slaughtered hog yields approximately 90 pounds of lean pork.
Pork production is fairly dispersed, though the U.S. is the leading producer with most of its production centered in North Carolina, Minnesota and Illinois.
Each Lean Hogs futures contract represents 40,000 pounds, with a minimum price fluctuation of $.00025 per pound, or $10 per tick. The contract trades Monday-Friday from 8:30 a.m. to 1:05 p.m. Central Time (CT).
Market participants trading HE monitor reports from the U.S. Department of Agriculture, or USDA. Each quarter the USDA releases the Hogs and Pigs Report, which contains critical data on herd size and offers various breakdowns of the hog crop.
Traders also consult the Monthly Slaughter Report and additional weekly and daily reports for further information about the domestic herd size and its slaughter.
Traders pair USDA statistics with historical and weather data to plan a trading strategy. Like most agricultural products, the lean hog trade is generally seasonal with prices at their highest between May and July.
Price movements often occur in lockstep with corn, which is the primary feed for hogs. When corn is expensive, growing a hog to size is costlier, which pushes HE higher.
During the corn harvest of October and November, lean hog prices sink to a relative low.
Finally, rising incomes across the globe, particularly in developing countries, increase global meat consumption and alter demand side of the hog trade. This growth is most pronounced in China, the leading producer and consumer of pork.