CME Group To Delist Frozen Pork Belly Futures, Options Friday
July 15 2011 - 4:15PM
Dow Jones News
CME Group Inc. (CME) disclosed that it will drop its iconic
frozen pork bellies contracts on Friday after a 50-year run that
made it an icon of the global derivatives industry.
The Chicago-based exchange operator said it would delist futures
and options on pork bellies after volume in recent years fell to
just a handful of contracts per month, despite efforts to revive a
business once among its most heavily traded.
"We continue to work with our meat-sector customers and other
market participants to identify new products to address their
risk-management needs," said a CME spokesman.
The contract started in 1961 as a way for meat packers and food
companies to manage their price risk of bacon. Pork bellies were
frozen and stored away in the winter, and then thawed out in the
summer to accommodate the annual summer increase in demand for
bacon as the nation munched through millions of
bacon-lettuce-and-tomato sandwiches. The seasonal pattern gave rise
to the need for producers to hedge against price fluctuations.
But bacon has grown more popular in recent years, increasingly
finding its way onto burgers and into salads and other dishes. The
result: Food companies no longer need to store as many frozen pork
bellies during the winter months.
-By Doug Cameron, Dow Jones Newswires; 312-750-4135;
doug.cameron@dowjones.com
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