Chapter 156
Pork Cutout Futures
15600.

SCOPE OF CHAPTER
This chapter is limited in application to Pork Cutout futures. In addition to this chapter, Pork Cutout
futures shall be subject to the general rules and regulations of the Exchange insofar as applicable.
For purposes of this chapter, unless otherwise specified, times referred to herein shall refer to andindicate Chicago time.

15601.

CONTRACT SPECIFICATIONSEach futures contract shall be valued at 40,000 pounds times the CME Pork Cutout Index®.

15602.

TRADING SPECIFICATIONS
15602.A.
Trading Schedule
Futures contracts shall be scheduled for trading during such hours and for final settlement in suchmonths as may be determined by the Exchange.
15602.B.
Trading Unit
The unit of trading shall be 40,000 pounds of 215-pound, 55-56% lean pork carcasses with 0.55-0.70
inches of back fat at the last rib or equivalent.
15602.C.
Price Increments
Minimum price fluctuations shall be in multiples of $.00025 per pound.
15602.D.
Daily Price Limits
Daily price limits for Pork Cutout futures are reset annually on the first trading day in September
based on the following: Daily settlement prices are collected for the nearest August contract over 45
consecutive trading days before and including the tenth business day in July (Last Trade Date of thenearest July contract). The average price is calculated based on the collected settlement prices andthen multiplied by 5 percent. The resulting number, or $0.045 per pound, whichever is higher,
rounded down to the nearest $0.0025 per pound, will be the new initial price limits for Pork Cutout
futures and will become effective on the first trading day in September and will remain in effectthrough the last trading day in August of the following year. During the last five days of trading, theexpiring contract month shall be excluded from triggering expanded limits.
There shall be no trading in Pork Cutout futures at a price more than the initial price limit above or
below the previous day’s settlement price. Should any Pork Cutout futures contract month within thefirst eight listed contracts subject to price limits settle at limit, or should any Lean Hogs futurescontract month within the first eight listed contracts subject to price limits settle at limit, the daily pricelimits for all contract months shall increase by 50 percent the next business day, rounded down to
the nearest $0.0025 per pound.
If none of the first eight listed Pork Cutout contracts subject to price limits settles at a price change
equal to or greater than the initial price limit the following business day, and if none of the first eight
listed Lean Hogs contracts subject to price limits settles at a price change equal to or greater than
the initial price limit the following business day, daily price limits for all contract months shall revert
back to the initial price limit on the following business day. There shall be no price limits on theexpiring contract month during the last five trading days.
15602.E.
Position Limits, Exemptions, Position Accountability and Reportable Levels
The applicable position limits and/or accountability levels, in addition to the reportable levels, are set
forth in the Position Limit, Position Accountability and Reportable Level Table in the Interpretations& Special Notices Section of Chapter 5.
A Person seeking an exemption from position limits for bona fide commercial purposes shall applyto the Market Regulation Department on forms provided by the Exchange, and the Market RegulationDepartment may grant qualified exemptions in its sole discretion.
Refer to Rule 559 for requirements concerning the aggregation of positions and allowable
exemptions from the specified position limits.
15602.F.
[Reserved]© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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15602.G.
[Reserved]
15602.H.
Termination of Trading
Trading shall terminate on the tenth Business Day of the contract month, 12:00 p.m.
15602.I.
[Reserved]15603.

SETTLEMENT PROCEDURES
15603.A.
Final Settlement
There shall be no delivery of pork carcasses in settlement of this contract. All contracts open as of
the termination of trading shall be cash settled based upon the CME Pork Cutout Index® for the five–
day period ending on the day on which trading terminates.
1. The Sample
The sample consists of the daily estimates by the USDA of the value of a 215-pound, 55-56% leanpork carcasses, with 0.55-0.70 inches of back fat at the last rib or equivalent and is based uponnegotiated wholesale prices being paid for sub-primal pork cuts. The information upon which theestimates are made and the resulting values are reported daily by the USDA in the “NATIONALDAILY PORK REPORT FOB PLANT – Negotiated Sales – Afternoon (LM_PK602)”.
2. The Calculation
The procedure for calculating the CME Pork Cutout Index is as follows, using data reported on fiveconsecutive weekdays.
a.

The most recent daily number of loads is multiplied by the corresponding daily carcass priceto determine the daily value;b.

The most recent daily value is added to the four previous consecutive daily values todetermine the 5-day value;c.
d.

The most recent daily load count is added to the four previous consecutive daily load counts
to determine the 5-day load count;
The 5-day value (i.e. the result from b. above) is divided by the 5-day load count (i.e. theresult from c. above) to obtain the CME Pork Cutout Index.

For the purposes of this rule, Friday of one week and Monday of the following week shall beconsidered to be consecutive weekdays.
Also for the purposes of this rule, any days when the necessary data are not released by the USDA
shall not be considered weekdays, in which case the first weekday immediately preceding and thefirst weekday immediately following such day(s) shall be considered two consecutive weekdays.
Should USDA price reporting be unavailable during any portion of the final settlement pricing
timeframe, CME may utilize data compiled from futures market activity during that corresponding
pricing timeframe to calculate the final settlement price.
15603.B. - H. [Reserved]15604.-08. [RESERVED](End Chapter 156)

© Copyright Chicago Mercantile Exchange, Inc. All rights reserved.

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