What are lean hog futures?

Lean hog futures contracts (HE) are standardized contracts within the pork industry, traded at the Chicago Mercantile Exchange (CME). First introduced in 1966 as live hog futures, this contract was designed to offer livestock producers a way to address their market risk due to shifting supply and demand factors, aside from the production risks they were already facing. Since changing names to lean hog futures in 1997, this contract has continued to see new and improved specifications, making it an even more viable hedging tool for producers and packers throughout the United States. The new cash settlement feature also makes the lean hog futures contract a viable hedging tool for international producers and pork importers/exporters.

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How to trade lean hog futures

Lean hog futures contracts are offered through CME on the Globex® trading platform and are available to trade electronically through Schwab. An account approved to trade futures is required in order to trade lean hog futures.

Lean hog futures contract specifications

Considering trading lean hog futures? Here are the lean hog futures contract specifications.

Exchange, Product Name, Product Code Chicago Mercantile Exchange, Lean Hog Future Contract, LH
Contract Size 40,000 pounds
Minimum Tick Size and Value 0.025/cwt, worth $10.00 per contract.
Trading Times Lean hog futures trade electronically on the Globex® platform Monday, 09:30 a.m. U.S. ET to 2:05 p.m. U.S. ET.
Principal Trading Months Principal trading months for lean hog futures include February, April, May, June, July, August, October, and December.

At Schwab, you also get access to advanced trading platforms and education, where you can take advantage of market research, real-time lean hog futures quotes, and other specialized tools. 

Lean Hog FAQ

One hog yields approximately 90 lbs of lean pork and pork production is well-dispersed making it a readily available and affordable protein staple in diets domestic and abroad, most notably China, the leading consumer of pork. 

Manufacturers of pork products trade lean hog futures contracts (LH) to hedge, or manage the risk of price fluctuations. Traders can use lean hog futures contracts to speculate on the price of pork products, which can change based on a number of different factors like greater demand for protein in consumer diets, livestock feed production due to weather events, changes in government policy, and more.

Speculators and hedgers, alike, plan trading strategies by monitoring the USDA’s quarterly hogs and pigs report for data around the domestic herd size and breakdowns of the hog crop, often marrying with data from the monthly and weekly slaughter reports, historical, weather and corn production data, and more.

It is important to understand the benefits and risks involved with lean hog futures before placing a futures trade. Compared to traditional investments, with lean hog futures you can trade outside of the traditional market hours associated with equities and take advantage of trading opportunities regardless of market direction. Lean hog futures also provide the ability to trade with greater leverage and allow a more efficient use of trading capital. However, trading leveraged products like lean hog futures also involves the risk that losses can exceed the amount originally invested and may not be suitable for all investors.

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