CHICAGO — The Chicago Mercantile Exchange disclosed that it will drop its iconic frozen pork-belly contracts Friday after a 50-year run that made it an icon of the global derivatives industry.
CME 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.
The contract started in 1961 as a way for meatpackers and food companies to manage their price risk for bacon. Pork bellies were frozen and stored in the winter to accommodate the annual summer demand for 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 year-round. The result: Food companies no longer need to store as many frozen pork bellies during the winter months.
