CME Lean Hog Futures
Cash-settled futures on U.S. market hog prices
CME Lean Hog futures are futures contracts on U.S. market hogs, listed on the Chicago Mercantile Exchange (CME). Despite the name, they are not futures on lean meat or pork cuts: the price refers to live hogs and is quoted per unit of carcass weight. It is the hog price benchmark the industry watches most closely.
What a futures contract is
A futures contract is a commitment to buy or sell a set quantity at a set price on a set future date. Exchanges list contracts with standardized terms — the commodity, the quantity and the date — so traders only decide the price.
Futures were created to help businesses that buy and sell physical goods cope with price swings. Hog producers incur costs long before shipment. It takes about six months to raise a weaned pig to market weight and about ten months from breeding to shipment, so falling prices during that period pose a major risk.
Selling futures before shipment protects against a price fall
So the producer sells futures before the hogs are shipped. If cash prices have fallen by shipment, the profit from buying back the cheaper futures offsets the lower cash price. If prices rise, the futures position loses money, but the hogs sell for more, so total revenue changes little.
For simplicity, this example assumes the cash price equals the futures price at shipment (zero basis). Figures are illustrative.
The key point is that the futures trade and the cash sale are separate. The futures market does not adjust the price paid by the packer to compensate the producer. The hogs are sold at the going cash price, and the gain or loss on the separate futures position offsets the price change.
Conversely, a buyer that will need hogs later, such as a packer, can buy futures to protect against rising purchase costs. Those who will sell later sell futures, and those who will buy later buy futures: this is the basic form of a hedge.
Speculators take the other side
Commercial hedgers alone cannot always find someone to trade with. In fact, commercial hedgers in Lean Hog futures hold far more short positions than long positions: in the CFTC Commitments of Traders data, short positions held by producers, packers and other commercials have outnumbered their long positions several times over in every year since 2006. Speculators, who trade to profit from price changes, take the other side. They trade to profit from price changes, without seeking to buy or sell physical hogs. Their participation makes it easier to trade when needed and keeps the market liquid.
In practice, traders do not pay the full value or move any hogs. They post margin to trade contracts, and most close out their positions with an offsetting trade before expiration.
Contracts derived from physical assets like this are called derivatives. There are markets for everything from crude oil and gold to coffee and orange juice. The first organized futures market is generally considered to be the Dojima Rice Exchange in 18th-century Osaka.
Futures are standardized forward contracts
A similar arrangement is the forward contract: a seller and a buyer agree directly on the terms, and the goods are delivered at maturity. Futures are forward contracts standardized for trading on an exchange. Because the terms are uniform, anyone can trade with anyone, and positions can be closed before maturity.
Deliveredat maturity
No delivery| Forward contract | Futures contract | |
|---|---|---|
| Participants | Commercial hedgers on both sides | Commercial hedgers and speculators |
| Contract terms | Quantity, dates and other terms negotiated individually | Standardized product, quantity and dates |
| Settlement | Hogs are delivered at maturity | Margin is posted; only price differences are paid (cash settlement) |
| Exiting early | Hard to cancel or transfer to a third party | Can be closed out at any time with an offsetting trade |
Trading volume is about 17 times U.S. pork production
Because traders who own no hogs can also take part, futures volume can far exceed physical production. Lean Hog futures averaged 47,330 contracts a day in 2021. At 40,000 pounds of carcass weight per contract, annual volume came to roughly 17 times U.S. annual pork production (about 27.7 billion pounds).
Basis means a hedge is not always perfect
Even with a hedge, revenue cannot be locked in completely. The price a producer actually receives differs from the futures price depending on location, buyer and quality; this difference is called the basis. As the basis changes, revenue still varies. How basis makes hedging results differ is explained in Further detail at the end of this article.
Contract months and settlement to a cash index
Settlement uses the CME Lean Hog Index
The cash asset a futures price is based on is called the underlying. The underlying of Lean Hog futures is the current price of U.S. market hogs — specifically the CME Lean Hog Index, which CME calculates every business day. Positions still open at expiration are settled in cash at the index value, with no hogs delivered (cash settlement).
Other futures and their underlyings: S&P 500 futures — the S&P 500 index; WTI crude oil futures — crude oil; gold futures — gold.
The index is built from the hog purchase reports that the USDA (U.S. Department of Agriculture) publishes every business day; packers above a certain size are required by law to report. From these data, CME takes the main purchase types for hogs bought from producers and calculates a weighted average price.
weight×Net
price
weight
29%
Other Producer Sold purchase types, Packer Sold hogs, and Packer Owned hogs with no transaction price (hatched)
Contracts expire in turn, and futures prices converge to the CME Lean Hog Index
A contract month is the month in which a futures contract expires; the contract that expires in August is called the August contract. Lean Hog futures have eight contract months: February, April, May, June, July, August, October and December. Contracts expire in turn, so each one eventually becomes the nearby contract (the one closest to expiration), and as expiration approaches, its price converges to the index.
Example: a producer who sold the August contract at $106 in mid-April receives the difference from the final settlement price of $101: $5 × 400 cwt = $2,000
Each contract stops trading at noon Central Time on the 10th business day of its contract month and is settled on the index for the two business days ending that day. Figures and line shapes are illustrative (one contract = 40,000 lb carcass = 400 cwt).
Contract specifications such as the contract size (40,000 pounds of carcass, about 18 metric tons) and daily price limits are listed on CME's contract specifications page.
What the price measures — live hogs on a carcass-weight basis
A live hog price per pound of carcass, not a cut price
The key point is that the price is quoted per unit of carcass weight. U.S. hogs are traded not on live weight but on carcass weight after slaughter, using the carcass-basis price. The Lean Hog Index is therefore the price of live hogs expressed per pound of carcass, not a selling price for pork cuts.
“Lean” means hogs priced on their lean content
The word “lean” does not mean the contract trades lean meat as a cut or product. The contract was launched in 1966 as Live Hog futures, priced on live weight with physical delivery. As hog pricing shifted to carcass grade and yield, it was converted in 1997 to a cash-settled contract that uses the lean value of the carcass as its pricing yardstick, which is where the name Lean Hog comes from. In other words, “lean” describes live hogs priced on their lean content, not the price of lean meat.
Why Lean Hog futures are the industry benchmark
In theory, a company is worth the money it will earn in the future. Hogs are similar: what underlies a futures price is what the hogs will sell for in the future. In both cases, valuations differ from person to person, depending on how they see future supply, demand and costs.
Shares in a private company are priced by negotiation, with the buyer and the seller each bringing their own view. For a listed company such as Apple, the price people follow every day is the result of many market participants trading on their views, and that price is regarded as the best estimate of value at the time (in valuation practice, too, prices in an active market are the preferred reference). Lean Hog futures serve a role similar to that of a listed company's share price.
The number, position and color of the dots are illustrative.
Negotiated cash trades are a small share of volume, but they are the only purchase type in which each price is set by individual negotiation, and they respond most sensitively to daily supply and demand. They are also the main reference for formula-priced trades, so price discovery starts in the cash market. See USDA Hog Prices for details.
In Lean Hog futures, many participants weigh the factors that drive future hog prices — feed costs, sow numbers and farrowings, disease and export demand — and trade on them. Open interest (contracts not yet closed out) is about 300,000 contracts, and more than 350 large traders are required to report their positions (as of July 2026). Contract months run about 18 months ahead, so the futures curve reflects the market's outlook for U.S. hog prices.
Spreads between contract months reflect market views too. Summer contracts normally trade above winter contracts (cash prices in June–July have averaged about 20% above January–February, 2010–2025). A wider-than-usual gap signals stronger expectations of tight hog supplies in summer.
Must be sold once they reach market weightShapes are illustrative (no price scale). Actual price movements are more complex: gold contracts do not all move by exactly the same amount, and other hog contract months can also move.
The industry watches the nearby contract
Trading concentrates in the nearest contracts. In mid-July 2026, the August contract traded about 36,000 contracts a day and October about 33,000, while contracts a year out traded fewer than a few hundred. Market views are most concentrated in the nearby contract, and the industry uses its price as the current market level. Deferred contracts reflect expectations for their months, but their thinner trading should be taken into account.
Pork Cutout futures: a separate contract for pork
Futures on pork itself, rather than on live hogs, are Pork Cutout futures. Launched in November 2020, they are cash-settled to a five-day weighted average of the cutout value, the composite benchmark for wholesale pork. Trading is small: in 2021, the year after listing, Pork Cutout futures averaged 127 contracts a day against 47,330 for Lean Hogs. The U.S. hog market still revolves around Lean Hog futures on the live side and the cutout value on the wholesale side.
| Lean Hog futures | Pork Cutout futures | |
|---|---|---|
| Average daily volume | 47,330 | 127 |
| Average open interest | 268,710 | 1,481 |
Key points
- CME Lean Hog futures are futures on live hogs (carcass-weight basis), not pork. The underlying is the current U.S. hog price, the CME Lean Hog Index, and contracts settle to this index at expiration.
- Futures prices are the result of many participants weighing feed, breeding, disease, exports and other factors, which makes them the industry's most-watched benchmark. Price discovery, however, starts with negotiated cash prices.
- Watch the nearby contract for the current market level. Deferred contracts, and spreads such as summer versus winter, show how the market sees supply and demand ahead.
- Participants are not only commercial hedgers. In recent Commitments of Traders data, positions held by funds and other managed money exceeded those of producers, packers and other commercials (as of July 2026). Speculators provide liquidity but also move prices, and their positioning (the COT report) is itself watched as market information.
Current Lean Hog prices and contract months are available on CME's website.
Basis and why hedging results differ from the target
Unexpected basis changes move hedged revenue away from its target
Basis is the price at which you sell your hogs (cash) minus the futures price. A short hedge fixes only the price at which you sell futures; the hogs themselves are sold at the cash price at shipment. If futures fall $30 and your selling price also falls $30, the futures profit exactly offsets the lower cash price. But your selling price does not necessarily move with futures. If it falls further, the difference is not recovered. When cash weakens against futures like this, the basis is said to weaken; if your price falls less than futures (the basis strengthens), net revenue ends up above the target.
Realized price = futures sale price $200 + basis at shipment −$10 = $190 (expected: $200 + −$10 = $190, as planned)
Figures are illustrative (per head). The situation matches the short hedge example above, with the basis expected to be −$10 at the time of the hedge.
Basis reflects location and quality at expiration; before expiration, price expectations also matter
Because futures settle to the cash index at expiration, the basis at expiration mainly reflects differences in location and hog quality. Where few hogs are marketed locally, cash prices tend to run above the national level. But because hogs can be shipped in from other regions, the regional difference is limited to the cost of transport.
Before expiration, expectations of price changes add to the location and quality differences.
| Half-month when the contract expires | Other half-months | |
|---|---|---|
| Main drivers of basis | Location and quality | Location and quality + price expectations |
| Average absolute basis | $1.47 | $3.53 |
$/cwt (carcass). Iowa/Minnesota, 2019–2025 (calculated from Iowa State University data).
Before expiration, basis also varies widely from year to year. For example, in the second half of August (using the October contract), it ranged from +$2.33 to +$15.02 depending on the year.
With no single cash market for hogs, location and quality differences remain
S&P 500 futures have a theoretical fair value based on the index level, interest rates and expected dividends. If futures trade above fair value, traders can sell futures and buy the stocks in the index, or do the reverse when futures are cheap, locking in the difference (index arbitrage). Because the stocks in the index can be bought and sold on exchanges at any time, this trading keeps the gap between futures and cash small and nearly constant. Hogs cannot be stored, and selling prices differ by region and by hog, so there is no trade that brings the futures price and your own selling price into line. As a result, changes in basis vary by region.
The cash asset hedged with S&P 500 futures is the S&P 500 itself, so no gap remains at expiration. For hogs, even when futures converge to the CME Lean Hog Index (a national average), your own hogs' selling price differs by region and quality, so that gap (the basis) remains.
Shapes are illustrative.
The data in this article is available on this dashboard.
- CME Group — Overview of CME Lean Hog Index and Lean Hog Futures (hosted by USDA AMS, 2021)
- CME Group — Overview of CME Pork Cutout Index and Pork Cutout Futures (hosted by USDA AMS, 2021)
- CME Group — Livestock Risk Management (video)
- CME Group — Livestock Overview (video)
- Virginia Tech Extension — CME Lean Hog Contract Replaces Live Hog Contract (1997)
- CFTC — Basics of Futures Trading
- CFTC — Economic Purpose of Futures Markets
- Japan Exchange Group — Dojima Rice Exchange (Japanese)
- USDA NASS — Livestock Slaughter 2021 Summary (2021 U.S. pork production)
- USDA NASS — Quick Stats (hog prices received, monthly, 2010–2025; used for the June–July vs. January–February comparison)
- CFTC — Commitments of Traders (as of July 7, 2026)
- Investing.com — Lean Hogs volume by contract month (as of July 13, 2026)
- Congressional Research Service — Crude Oil Futures Prices Turn Negative (April 22, 2020)
- CME Group — Lean Hog futures
- CME Group — Lean Hog contract specifications
- Pork Information Gateway — Pork Producers and the Futures Markets (PIG 11-03-05, 2006)
- Iowa State University, Ag Decision Maker — Lean Hog Basis - Iowa/Minnesota (File B2-41, revised February 2026)
- CME Group — Calculating Fair Value (equity index futures)
- CME Group — Equity Index Basis
The “roughly 17 times” figure is an estimate: CME's 2021 average daily volume (47,330 contracts) × about 252 trading days × 40,000 pounds per contract, divided by 2021 U.S. pork production (27.7 billion pounds, USDA NASS).
Drafted with AI under the direction of our editor, who reviewed and edited every section.