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Frequency of Profitable Hedging Opportunities for Lean Hogs

Lee Schulz and, Jenna Lansing (July, 2015)

Summary

Lean Hog futures hedging offer an opportunity for producers to lock-in a selling price prior to when the hogs are sold to the packer. This expanded pricing window offers a greater opportunity to protect a profitable price than relying solely on the cash market the day of sale. For the 120 months in 1999-2008 futures offered a break even hedge or better 67 percent of the days prior to harvest. Selling in the cash market at harvest was break even or better only 60 percent of the time.