October 7, 2013 / 10:44 PM / in 4 years

CME issues contingency plan for October lean hogs settlement

CHICAGO, Oct 7 (Reuters) - The CME Group Inc on Monday outlined how it will determine final settlement prices for its October 2013 lean hog futures and options next week if the U.S. government shutdown persists.

Final settlements for the contracts normally are based on an index that the CME calculates from price data supplied by the U.S. Department of Agriculture. Because of the government shutdown, the CME Group last week said it would suspend calculation and distribution of its indexes for lean hog as well as feeder cattle.

The October hogs contract will expire from trading on Oct. 14, with its final settlement price scheduled for Oct. 16.

If USDA’s price data from Oct. 11 and 14 is available by Oct. 15, the exchange said it would use the data to determine the final settlement price for October 2013 contracts.

If the government data is not available by Oct. 15, CME said it would calculate final settlements based on the volume weighted average price of the October lean hogs futures contract for the two-day period of Oct. 11 and 14.

The price would incorporate activity from both the electronic Globex platform and the open-outcry pit during “regular” trading hours, from 9:05 a.m. to 1 p.m. CDT (1405 to 1800 GMT) on Oct. 11, and 9:05 a.m. to 12:00 noon on Oct. 14.

“The alternate final settlement price will be applied to any open positions in October 2013 futures and options on the normally scheduled date of Oct. 16,” the exchange said in a notice.

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