Lean Hogs (HE)

America's pork market barometer. Lean Hogs futures track the value of market hogs ready for processing.

2-Minute Beginner Summary

Lean Hogs futures represent market-ready hogs for pork production. Unlike cattle, hog production is more industrial with faster cycles (6 months vs 2 years). China is the world's largest pork consumer and their imports heavily influence U.S. exports. Feed costs (corn, soybean meal) are major input costs.

What Is Lean Hogs?

Lean Hogs futures represent hogs ready for slaughter, traded on CME. They settled to cash until 1997, now they settle to the CME Lean Hog Index.

Why HE Matters

Pork is the world's most consumed meat. U.S. exports to Mexico, Japan, and China are significant.

What Moves the Price?

Top 6 drivers affecting Lean Hogs prices:

Chinese Demand

China is the world's largest pork consumer. Their import needs swing markets.

Feed Costs

Corn and soybean meal are primary feeds. High costs squeeze producer margins.

Disease Outbreaks

African Swine Fever and PRRS can devastate herds.

Hog Supplies

USDA Hogs and Pigs report shows breeding herd and farrowing intentions.

Export Demand

Mexico, Japan, and China are major buyers. Trade policies matter.

Consumer Demand

Bacon, ham, and pork chops compete with other proteins.

Market Structure

Spot vs Futures

CME Lean Hogs settle to the CME Lean Hog Index, a 2-day weighted average of cash prices.

Contango & Backwardation

Strong seasonality. Typically backwardated in summer, contango in winter.

Key Exchanges: CME Group

Contract Size: 40,000 pounds (approx 200 hogs)

Seasonality

Strong seasonality tied to grilling season and supply.

Peak Months: May, June, July, August

Low Months: November, December, January, February

Prices typically peak in summer (grilling season). Fall/winter sees lower demand and heavier hog weights.

Macro Sensitivity

Hog prices track consumer demand and export competitiveness. A weak dollar supports exports.

USD Sensitivity: negative
Inflation Sensitivity: positive
Growth Sensitivity: positive
Rates Sensitivity: neutral

Stock & ETF Exposure Map

Related Stocks

Related ETFs

COW - iPath Bloomberg Livestock ETN (futures)

Key Calendar & Reports

USDA Hogs and Pigs (Quarterly (last week of Mar, Jun, Sep, Dec))

Source: USDA. Hog inventory, breeding herd, farrowing intentions

Weekly Slaughter (Weekly)

Source: USDA. Number of hogs slaughtered

USDA Cold Storage (Monthly)

Source: USDA. Pork in freezer storage

China Import Data (Monthly)

Source: Chinese Customs. Pork import volumes

How to Trade Lean Hogs

ETFs like COW offer exposure. Meatpacker stocks (TSN) provide indirect access. CME futures are the benchmark.

Frequently Asked Questions

What is African Swine Fever?

A deadly pig disease (no human risk) that devastated China's herd in 2018-2019. Still spreading in some regions.

Why is China important for hogs?

China consumes half the world's pork. When their production drops (ASF), they import heavily from the U.S.

Why do hog prices have strong seasonality?

Summer grilling season boosts demand. Also, hog weights are lighter in summer due to heat stress.

What is the hog/corn ratio?

Hog price divided by corn price. Above 20 is generally profitable for producers.

How fast do hogs grow?

From birth to slaughter is about 6 months. Much faster than cattle (18-24 months).

What is pork belly?

The belly section of the hog, used for bacon. Used to have its own futures contract.

How do tariffs affect hog prices?

China's retaliatory tariffs in 2018-2019 crushed U.S. exports until ASF forced them to import anyway.

What is the cutout value?

The wholesale value of the pork carcass after processing into primal cuts.

Glossary

Lean Hog Index: CME's 2-day weighted average cash price for settlement.
Cutout: Wholesale value of pork carcass cuts.
Primal Cuts: Main sections: ham, loin, belly, shoulder.
Farrowing: Sows giving birth to piglets.
Breeding Herd: Sows and boars for breeding, indicates future supply.
Market Hogs: Hogs ready for slaughter, typically 270-280 lbs.
ASF: African Swine Fever - deadly pig disease that devastated China's herd.
PRRS: Porcine Reproductive and Respiratory Syndrome - another hog disease.
Packer: Company that slaughters hogs and processes pork.
Sow: Female pig that has given birth.