MURICO.com Forum

The swine scheduled for delivery report shows - -

shows that packers have 6K fewer hogs scheduled today than they had on this date last week which is really no change.

However -

When we look back one-year we see that packers have 218K fewer hogs than they had on this date one-year ago. That is a decline of 9.77%. I believe that is significant, especially when associated with falling carcass weights. Even though carcass weights seem to be falling, they are stull 10.35# heavier than they were one-year ago.

I have a loop on my hog pricing model that attempts to project the cash settlement index. It clicks in when there are 16 days of life left in the front month futures. This loop requires certain assumptions be made relative to the daily changes in the CME Lean Hog Index component. This month assumption is that the daily component change will be mid-point between the average daily change over the past ten-year and the maximum daily drop in the component over the past ten years. This means that there is a strong bias build into the model that the index is headed lower but not as much as the maximum drop seen in 2009.

This gives me a projected settlement index for the QQQs of 122.69 with a range of 122.19 to 123.19. This has given me enough back bone to scalp the QQQs from the long side today.

Best wishes,

dhm