CME Group

Overview of CME Pork Cutout Index 

and Pork Cutout Futures

Anne Krema, Director 

Commodity Research & Product Development 
CME GROUP PUBLIC © 2021 CME Group. All rights reserved. 

Disclaimer

Neither futures trading nor swaps trading are suitable for all investors, and each involves the risk of loss. Swaps trading 

should only be undertaken by investors who are Eligible Contract Participants (ECPs) within the meaning of Section 1a(18) 

of the Commodity Exchange Act. Futures and swaps each are leveraged investments and, because only a percentage of a 

contract’s value is required to trade, it is possible to lose more than the amount of money deposited for either a futures or

swaps position. Therefore, traders should only use funds that they can afford to lose without affecting their lifestyles and 

only a portion of those funds should be devoted to any one trade because traders cannot expect to profit on every trade.

CME Group, the Globe Logo, CME, Globex, E-Mini, CME Direct, CME DataMine and Chicago Mercantile Exchange are 

trademarks of Chicago Mercantile Exchange Inc. CBOT is a trademark of the Board of Trade of the City of Chicago, Inc. 

NYMEX is a trademark of New York Mercantile Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc. All 

other trademarks are the property of their respective owners.

The information within this communication has been compiled by CME Group for general purposes only. CME Group 

assumes no responsibility for any errors or omissions. Additionally, all examples in this communication are hypothetical 

situations, used for explanation purposes only, and should not be considered investment advice or the results of actual 

market experience. All matters pertaining to rules and specifications herein are made subject to and superseded by official 

CME, CBOT, NYMEX and COMEX rules. Current rules should be consulted in all cases concerning contract specifications.

Copyright © 2021 CME Group Inc. All rights reserved.
CME GROUP PUBLIC © 2021 CME Group. All rights reserved. 

CME Group offers the widest range of benchmark 

futures and options products, covering all major asset 

classes – and all kinds of risk.
CME GROUP PUBLIC © 2021 CME Group. All rights reserved. 

Where the World Comes to Manage Risk

CME Group’s ADV 

is roughly 19 million 

contracts

Agricultural Product 

ADV is roughly 1.4 

million contracts

Livestock ADV is 

roughly 138,000 

contracts

Note: Date range referenced for ADV is 1/1/2021-9/30/2021
CME GROUP PUBLIC © 2021 CME Group. All rights reserved. 

Price Risk Management

• Futures and options markets are used by 

agricultural market participants to hedge 

against adverse price movements in the 

cash market.

• Trade in futures is the buying and selling of 

a contractual obligation calling for future 

delivery of a specified commodity or cash 

payment (debits or credits) in lieu of 

physical delivery.

• Options on futures are contracts that 

represent the right, not the obligation, to 

either buy or sell a particular underlying 

futures contract at a specified price on or 

before a specified date.
CME GROUP PUBLIC © 2021 CME Group. All rights reserved. 

CME Group Agricultural Product Line

Livestock

Live Cattle

Feeder Cattle

Lean Hogs

Pork Cutout

Lumber & Softs

Random Length Lumber

Cotton

Cocoa

Coffee

Dairy

Class III Milk

Class IV Milk

Nonfat Dry Milk

Dry Whey

Cash-settled Butter

Cash-settled Cheese

Block Cheese

Grains & Oilseeds

Corn

Soybeans

Soybean Oil

Soybean Meal

Chicago SRW Wheat

KC HRW Wheat

Black Sea Wheat

FOB Santos Soybeans

Malaysian Palm Oil

Rough Rice

Oats

Fertilizer

Urea FOB US Gulf

Urea FOB Middle East

Urea CFR Brazil

Urea FOB Egypt

DAP FOB NOLA

UAN FOB NOLA Swaps

MAP CFR Brazil 
CME GROUP PUBLIC © 2021 CME Group. All rights reserved. 

Price Risk Management Tools for the Swine Industry 

1961

Frozen Pork Belly Futures Introduced

Traded for over 50 years 

1966

Live Hog Futures Introduced

Physically delivered contract

Traded for over 30 years 

1997

Lean Hog Futures/Options Introduced

Financially settled contract

Average Daily Volume in 2021 = 47,330; Average Daily Open Interest in 2021 = 268,710

2015

CME Pork Cutout Index Introduced

Non-tradable index

Calculated using USDA’s National Daily Pork Report FOB Plant - Negotiated Sales – Afternoon (LM_PK602) report 

2020

CME Pork Cutout Futures/Options Introduced
CME GROUP PUBLIC © 2021 CME Group. All rights reserved. 

A Changing Landscape and a Need for New Tools

• An increasing number of contracts 

between producers and packers have 

been referencing the pork cutout value in 

their base price calculations. 

• As a result, the need emerged for 

additional price risk management tools for 

the industry. 
CME GROUP PUBLIC © 2021 CME Group. All rights reserved. 

A Changing Landscape and a Need for New Tools

 $(15.00)

 $(5.00)

 $5.00

 $15.00

 $25.00

 $35.00

 $45.00

 $55.00

CME Pork Cutout/Lean Hog Index Spread

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

CME Pork Cutout and Lean Hog Indexes

Lean Hog Index Pork Cutout Index
CME GROUP PUBLIC © 2021 CME Group. All rights reserved. 

Introducing: CME Pork Cutout Futures and Options

• A tool for producers, packers, processors, wholesalers, importers, and exporters to tailor their risk 

management strategy according to exposure to pork cutout values

• Allows hog producers to more effectively hedge their exposure 

• Allows packers, food distribution companies, HRI and exporters/importers to manage cutout price 

exposure further down the supply chain

• An opportunity to trade the spread between Pork Cutout and Lean Hogs
CME GROUP PUBLIC © 2021 CME Group. All rights reserved. 

CME Pork Cutout Futures Contract Specifications

Specification Description

Contract Unit 40,000 pounds (~18 MT)

Price U.S. Cents per pound

Minimum Price 

Fluctuation 

Limits

$.00025 per pound ($10 per contract)

Daily Price Limit $0.0575/lb, expandable to $0.085/lb

Trading Hours Globex: Monday – Friday: 8:30am – 1:05pm CST

Product Code CME Globex: PRK

Clearing:PRK

Listed Contracts 2 Monthly contracts of Feb, Apr, May, Jun, Jul, Aug, Oct, Dec 

Settlement 

Method

Pork Cutout futures will be cash settled based upon the CME Pork Cutout Index® 

price for the Five–day period ending on the day on which trading terminates. The 

relevant index price is released one business day after trading in the expiring 

contract month terminates.

Termination of 

Trading 10th business day of the contract month, 12:00 p.m.

Exchange 

Rulebook CME 156
CME GROUP PUBLIC © 2021 CME Group. All rights reserved. 

CME Pork Cutout Contract Since Launch

• Since launching on November 9, 2020, Pork Cutout futures and options have traded over 

29,000 contracts, equating to over 1.1 billion lbs. traded

• Market composition has included participants across the supply chain

• Average daily volume (ADV) for 2021 is 127 contracts

• Average Open Interest for 2021 is 1,481 contracts

• Continued industry support
CME GROUP PUBLIC © 2021 CME Group. All rights reserved. 

CME Pork Cutout Index

• Effective on Monday, August 24, 2015, CME Group began publishing the CME Pork Cutout 

Index

• “National Daily Pork Report Fob Plant - Negotiated Sales – Afternoon” (LM_PK602)

• Takes into account the daily number of loads and the daily carcass price to determine the 

daily total value

• 5-day moving weighted average price 

• Calculated every business day
CME GROUP PUBLIC © 2021 CME Group. All rights reserved. 

Datapoints Used for Calculation of the CME Pork Cutout Index

Source: https://mymarketnews.ams.usda.gov/filerepo/sites/default/files/2498/2021-10-08/513862/ams_2498_00415.pdf
CME GROUP PUBLIC © 2021 CME Group. All rights reserved. 

CME Pork Cutout Index Calculation

DATE LOADS CARCASS 

VALUE

DAILY VALUE 

(LOADS X CARCASS 

VALUE)

10/8/2021 280.54 106.99 $30,014.9746 

10/7/2021 366.96 112.26 $41,194.9296 

10/6/2021 288.56 112.86 $32,566.8816 

10/5/2021 341.51 108.13 $36,927.4763 

10/4/2021 292.27 112.40 $32,851.1480 

SUM 1,569.84 $173,555.4101 

CALCULATED 

INDEX PRICE

ROUNDED INDEX 

PRICE

$173,555.4101 

/ 1,569.84

= $110.5561 

$110.56

Example calculation of the index for the five business days 

ending on Friday, October 8, 2021:

The sum of the five daily values is $173,555.4101. This is then divided by the sum 

of the five daily loads, 1,569.84, to obtain the index price of 110.5561 , which is 

rounded to 110.56.
CME GROUP PUBLIC © 2021 CME Group. All rights reserved. 

Published CME Pork Cutout Index Prices

https://www.cmegroup.com/market-data/reports/commodity-index-prices.html
CME GROUP PUBLIC © 2021 CME Group. All rights reserved. 

CME Pork Cutout Index Over Time

 $40.00

 $50.00

 $60.00

 $70.00

 $80.00

 $90.00

 $100.00

 $110.00

 $120.00

 $130.00

 $140.00

$/cwt

CME Pork Cutout Index
CME GROUP PUBLIC © 2021 CME Group. All rights reserved. 

Final Settlement
CME GROUP PUBLIC © 2021 CME Group. All rights reserved. 

Resources 

https://www.cmegroup.com/trading/agricultural/livestock/cme-porkcutout-futures-and-options.html https://www.cmegroup.com/tools-information/find-a-broker

Getting Started: Find a Broker Pork Cutout Landing Page
CME GROUP PUBLIC © 2021 CME Group. All rights reserved. 

Contact Information

ANNE KREMA

Director – Commodity Research and Product Development 

T (312)648-3817

Anne.Krema@cmegroup.com