How Do U.S. Hog Farmers Use Futures Contracts to Stabi-lize Prices?

Seungyoon Han, Seoul Academy International School, 422 Yeoksam-ro, Gangnam-gu, Seoul 06200, Republic of Korea
Emmelia Jung, Seoul Academy International School, 422 Yeoksam-ro, Gangnam-gu, Seoul 06200, Republic of Korea
Hailey Lee, The Taft School, 110 Woodbury Road, Watertown, CT 06795, Watertown, USA
Jiyoo Lee, Seoul Academy International School, 422 Yeoksam-ro, Gangnam-gu, Seoul 06200, Republic of Korea
Volume11 nos.1 September 2025 ISSN 2755-3272

Keywords

Hog futures; U.S. pig market; price stabilization; vertical integration

Abstract

In this paper, we examine how U.S. hog farmers utilize futures contracts to stabilize prices in a volatile commodity market. Biological lags, herd behavior, global demand shocks, and other factors can cause oscillations in income and production cycles, many of which have an unpredictable impact. Farmers, for instance, lock in prices for future sales using lean hog futures traded on the CME, which allows them to manage risk and make more rational, forward-looking decisions. The study also looks to futures' roles in price discovery and hedging, along with how vertical integration and contract farming shape risk for producers. Using Real-World Futures in Pork Production: A JBS USA Case Study.