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The final Purchase Index for - - -

5/4/15 was up +$1.35 and the model projects that the CME Lean Hog Index component on the 5-4-15 kill will be up between +1.00 and +1.30. Packers are really laying the money on hogs and producers are taking their bids and shipping the hogs. Yesterday packers purchased 122.0% of the moving average daily purchases. That is a solid purchase of course packers had to pay up to get that many. I suppose it is possible that packers are a little short-bought in front of the Memorial Day holiday. Yesterday's scheduled for delivery report showed that packers hardly had 1 1/4% more hogs scheduled than on this date one-year ago.

They should have had about 8.0% more according to the last H&P report.

The six-day moving average carcass weight now stands at 213.60#. That is -4.15# below the same date last year. This suggests that produces have been pulling hogs forward a bit. I suppose it is possible that they have been pulled forward enough to create a small hole in supply but I hardly think so. The H&P reports have been quite good for a while so there is a good chance that producers have the hogs that the USDA reported.

My feeling is that the firmness in the Index is more demand driven with the holiday on the horizon that by a supply-shortage due to lack of hogs.

When I saw how strong the Purchase Index was this morning, I added a couple of long MMMs to my spread portfolio. So far it looks like it was the correct thing to do. If we get a dip in the MMMs, I will add a couple more.

Best wishes,

dhm

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The final Purchase Index for - - -
Ka! Ching!! Another K/M spread just - - -