CME Group Inc. will shut down its frozen pork belly contract, ending a half-century run for a commodity that once symbolized the Chicago exchange’s raucous futures trading pits but had faded into irrelevance in recent years.

On July 18, CME will delist pork belly futures and options because of a “prolonged lack of customer demand for the and after significant discussion with industry participants,” company spokesman Chris Grams said in an e-mail. Click here for the CME’s announcement on delisting the contract.

Launched in September 1961 and once one of CME’s most actively-traded contracts, the exchange’s pork belly business dwindled over the past decade as the meat industry shifted to fresh bellies.

One belly contract represented 40,000 pounds of government-inspected frozen hog carcass slabs that were to be sliced into bacon. The contract was intended to be a risk management tool for meatpackers and distributors contending with volatile hog prices, according to Market Technologies, LLC, though the belly pit also gained a reputation as a speculators’ playground.

More than 2.8 million pork belly futures contracts traded in 1982, the commodity’s peak year, according to CME. So far this year, two contracts traded, both in January.

While many agricultural futures contacts have been successful in recent years, CME's elimination of the pork belly contract "shows that, in the end, futures contracts needs to strike a delicate balance between hedgers and speculators," livestock industry analysts Steve Meyer and Len Steiner said in a July 18 report.

"The frozen pork belly contract was no longer seen by end users as an effective hedging instrument, particularly given the shift towards using more frozen bacon," Meyer and Steiner wrote. "Also, the seasonality of pork belly prices no longer is what it used to be, with bacon becoming a staple of foodservice menus year round."

Pork bellies increasingly became an afterthought as most of CME’s livestock-based trading shifted to cattle and hog futures markets. In 2007, CME, previously known as the Chicago Mercantile Exchange, bought the Chicago Board of Trade, adding agricultural contracts based on corn, soybeans and other crops.

The pork belly contract’s demise was widely expected in the futures industry, and likely will have little, if any, impact on CME’s overall business. CME agricultural trading boomed over the past year as shrinking global grain supplies and rising meat demand fueled a commodities boom.

During the first six months of this year, an average of 1.15 million agricultural futures and options contracts traded each day on CME, up 27 percent from the same period in 2010, according to an exchange report.

Trading in corn futures, CME’s biggest agricultural product, averaged 352,304 contracts a day, up 28 percent. Live cattle and lean hog futures trading averaged 55,547 contracts and 39,991 contracts a day the first six months of this year, up 24 percent and up 25 percent, respectively.

It isn’t known yet whether CME has any replacements in mind for the pork belly contract.

Grams, the CME spokesman, said the exchange will “continue to work with our meat sector customers and other market participants to identify new products to address their risk-management needs.”