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It seems to me that the futures market on cattle should go away...
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Kooiker
Posted 3/27/2020 11:12 (#8142985 - in reply to #8142965)
Subject: RE: It seems to me that the futures market on cattle should go away...



milofarmer1 - 3/27/2020 11:00
Kooiker - 3/27/2020 07:48 to force delivery but at least it appears that it is an option.   

There is NO delivery (none at all, never)  in the CME hog futures and as a result there is NO convergence vs the cash markets ever.<
Yes they will converge with the auctions, or your hedge account will settle the difference at closing if there is any. But in reality the last day of trading the futures will match the index because traders don't want to settle.





The "lean hog index" is not the cash market.    The lean hog futures DO NOT converge with the cash market because there is NO DELIVERY.

The cash market only makes up a small % of the lean hog index.    Lots of exclusive packer deals that are not available to everyone are used in the makeup of the index.




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