Why the Future Looks Different for Hogs and Cattle

The different supply-demand dynamics of the domestic pork and beef markets are reflected in the divergent forward curves of CME Lean Hog ​​and Live Cattle futures. The USDA forecasts tighter beef stocks in 2023, while pork and pork production is expected to rise next year. Other various fundamental factors influence the unique volatilities and export profiles of the two product sectors.

Forward Curves Diverge

The image below shows the settlement prices for each contract month that make up the forward curves of Lean Hog ​​and Live Cattle futures on the trading date of July 28, 2022. At 80.750 cents per pound, Lean Hogs futures fell 32% below the front in December 2023 – monthly instrument (119.125, August 2022), while the December 2023 Live Cattle futures (at 156.300) settle 15% above the first monthly instrument (136.175, August 2022).

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