What is Lean Hog?
Lean Hog is a type of pork that can be easily traded in mercantile and option exchanges. This type of hog is the source of the majority of the pork meat in the United States. Lean Hog futures and options are traded on the Chicago Mercantile Exchange and has a two-day weighted average of cash markets.
Uses of Lean Hog
Lean Hog is a pigs carcass once slaughtered, this can then be broken down into other cuts of meat used for consumption.
These can include, but not limited to:
- Pork belly
- Shoulder ham
Risks of Lean Hog
Like any futures contract, there is always the possibility that the underlying asset i.e. lean hog will move in the opposite direction to which you hold your contract. For example: you have taken a long position (expecting the price of lean hog to rise), if this were to happen and the lean hog fell in price, your long position in lean hog will decrease in value.
Like any livestock the inherent risk of disease. Weather conditions such as droughts, floods or cyclones can effect the production levels of lean hog.