MURICO.com Forum

The final Purchase Index for - - -

8/28/15 was down -$0.38 and the model projects that the component on Friday's kill will decline between -0.15 and -0.45. On Friday the model missed quite badly on the projected change to the component with the component being much weaker than projected. Packers have quite large numbers of hogs purchased to be delivered over the next 14-days. Trying to project which batch they will kill on a given day is difficult but by and large the model does quite will in giving us a number well in advance of the USDA and it beats the CME's report by a couple of days.

Usually the CME Index goes into a mild tail spin following retailers stocking their cases for the Labor Day holiday. Demand seems to falter a little and supply often picks up a bit. This year could be different if China comes into the marketplace in a significant way.

Or maybe they will wait for the fall dip and then start buying. There seem to be enough uncertainties in the market place to keep the volatility in the hogs quite high. And that makes fishing good for ITZ.

The six-day moving average carcass weight continues to drift lower but the kill numbers are good enough to keep pork production at an adequate level.

Now I need to go work on my trading strategy for today. With the "Gap" being at -11.85, traders have already priced a lot of index weakness. It would not surprise me to see the index drop significantly and then rally in front of the VVVs going to cash settlement.

Best wishes,

dhm