CME Group Inc. has dropped its iconic frozen pork bellies contracts 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, according to Dow Jones.
"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.
Source: Dow Jones Newswires