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© 1984, The Board of Regents of the University of Nebraska on behalf of the University of Nebraska–Lincoln Extension. All rights reserved.


This NebGuide discusses how to estimate when it might be profitable to deliver on a hog futures contract and outlines delivery costs and procedures.

Although most hedgers do not actually make delivery on a live hog futures contract, it is the threat of delivery that makes hedging an effective market risk reduction technique. Normally, to fulfill the futures obligation, a producer buys an offsetting futures contract rather than making delivery.

Actual delivery on a futures contract should occur only when the basis during contract maturity is wider than anticipated -- and greater than the delivery costs.