Futures trading history buffs are in mourning today, as the CME moves into a brave new world without pork bellies futures contract trading. The oldest existing CME livestock futures contract has seen a sharp decrease in volume over the years as the food processing industry transitioned away from the slabs of frozen pork and towards fresh meat.
Pork bellies have long been synonymous with all that is wrong with the futures markets because of their high volatility and reputation for terrible fills. They were also the butt of futures industry jokes more often than not, whether because of their silly sounding name or Eddie Murphy’s uncanny ability to call their price in the classic movie ‘Trading Places’. But their death has been a long time coming – as commentary from Dan Collins on the Futures Mag website highlights, those trading pits have been gone since 2007, when the CME transitioned pork bellies to a purely digital trade.
Before we get too nostalgic for the old days, it’s probably important to put these changes in context. Pork bellies may be gone, but we’ve come a long way in trading volume since the Chicago Board of Trade listed the first standardized futures contracts in 1864. Just one part of the futures trading business – managed futures – has seen total assets under management increase 940 fold (no, that’s not a typo) since 1980 [as of the 1st quarter of 2011 according to Barclay Hedge data, this gain is both from new investment and returns on investment] . The times, they are a’ changing alright, but it’s less about futures trading dying than it is growing up.
Second, the closing of the pork bellies contract is reflective of the fact that managed money is not the only driver of futures markets (are you listening, D.C. politicians?). Pork bellies contracts didn’t die just because the so-called speculators decided they didn’t like them. They died because demand- the most fundamental driver of all- evaporated as a result of innovation in another corner of the business world. When the demand evaporated, these speculators recognized it and put their money elsewhere, where higher volume fosters more liquidity and opportunities to invest.
Still, at the end of the day, a piece of history is passing with the elimination of the pork bellies contract. As we bid adieu to the past, we have to wonder, what does the next chapter hold for the futures industry?
The performance data displayed herein is compiled from various sources, including BarclayHedge, RCM's own estimates of performance based on account managed by advisors on its books, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.
Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.
Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.
Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.
Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.
RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.