Hogs moved from physical delivery to cash settlement in 1996 because delivering live animals had become unworkable. Settlement is against the CME Lean Hog Index derived from USDA reported carcass transactions.
The market is intensely seasonal — supply peaks in autumn, demand peaks with summer grilling — and highly sensitive to disease news and to export policy, since China is the largest consumer. African swine fever headlines have produced repeated lock-limit moves.
Example: hogs at 85 cents per pound on 40,000 pounds is $34,000 per contract. The daily limit of 3.75 cents is $1,500 per contract, and three consecutive limit days is a $4,500 loss with no exit available.
Related: live-cattle-futures, lock-limit, cash-settlement, seasonality, soybean-meal-futures