1/25/16 was UP $2.72!!!!! And the model projects that the component on the 1/25/16 kill will be up between +1.20 and 1.50. It appears that the Index is now on the spring up-trend and Investors are projecting that the index will continue to climb until it hits 79.525 by 6/14/16 when the June futures go to cash settlement. We are going to find that investors are going to change their minds dozens of times between now and then. This will create fishing opportunities galore for ITZ and I anticipate spreading opportunities for yours truly.

Packers were hungry for hogs yesterday and made a solid purchase at 112.4% of the moving average daily purchases and they really had to pay-up to get them..

If my model is working correctly and investors are fairly near correct in their pricing of the MMMs, then we will get an average daily component gain of 0.54 between now and 6/14/16. But it is not going to be a smooth line up. It is going to be like a boy walking up stairs spinning a Yo! Yo!. The direction may be up but sometime the Yo! Yo! will drop.

I worked my model last night in order to project a cash settlement for the GGG. In doing so, I made the following assumptions:

1. Producers of Index hog are quite current in their shipments.

2. The last H&P report is fairly accurate and the inventory of hogs that will be coming to market is about 1.6% larger than the same period last year.

3. Since the Index has been beaten down so badly this year, we will not see a sharp drop in the Index like we saw last year leading up to the GGGs going to cash settlement but a gradual advance.

4. The amount of this advance will be in the range of the advance projected by the "Gap" between the MMMs and the component, the average gain in the index over the past five days and the gain in the index in 2014 leading up to the GGGs going to cash settlement.

Using these assumptions, the model projects that the cash settlement index for the GGGs will be 65.48 with a range of 64.99 to 65.99. I still have two long GGGs and will stick with them. In fact, when I saw how strong the Purchase Index came in, I bought two more.

Yesterday I had spreads coming and going so fast my head was almost spinning. I was able to get rid of most of the long G/J spreads that got dumped on my boat Friday. That, when coupled with a few friendly scalps, made a very nice day for me.

Best wishes,

dhm