Is China's New Live Hog Futures Market Efficient?

On January 8, 2021, China's first live-animal and live-delivery futures product—in live hogs—was listed on the Dalian Commodity Exchange (DCE) to serve as a risk management tool. Our paper examines whether this newly-established market realized its primary functions of market quality, price discovery, and hedging. Our results suggest that the live hog futures market performs its price discovery function well, and can hedge between 7% and 10% of the risk in the spot market, even though it is less actively traded, less liquid, and more volatile than the mature corn and soybean meal futures markets