MURICO.com Forum

The final Purchase Index for - - -

6/18/15 was down -$0.37 and the model projects that the CME Lean Hog Index component on the 6-18-15 kill will shed something inthe range of -0.25 to -0.55. Packers are on track to kill 13.32% more hogs this week than they kill in the same week last year. That's a lot more than projected from the last H&P report. Yesterday the six-day moving average carcass weight dipped to 212.68#. That is down -2.78# from the same date last year but up 7.34# from 2013. I think this is telling us that producers are liquidating their market hogs at a fairly rapid clip but I'm not sure why. It is one thing if they are wanting to get current in their shipments knowing that there is generally a fall decline in prices and they are wanting to be ahead of that decline.

It is quite another thing if they are shipping hogs at a rapid clip to make room for large numbers of younger hogs that are coming on behind this batch. The past two H&P reports have told us that producers are in the expansion phase of the hog cycle. Next Friday we get the next report that may tell us a bit more about what producers are doing. The kill rate is suggesting that expansion has been somewhat greater than reported by the USDA. If that is the case and the PED virus does not rear its ugly head, we could see some cheap hogs this fall. High priced hogs does encourage expansion and we really saw high priced hogs last year!

It takes low priced hogs to trigger the liquidation phase of the hog cycle. I don't think prices are quite low enough yet to trigger the liquidation phase of the hog cycle especially with corn prices being where they are.

Best wishes,

dhm