Friday, 1/15/16 was up +0.52 to 56.05. That closes the "Gap" to 6.00 with the GGGs being premium to the component. There are now 19-days until the GGGs go to cash settlement. The question is, "Will this uptrend be strong enough to close the Gap or will the futures have to back-pedal a little?"

To answer that question, I have looked at the 6-day moving average carcass weight. It eased to 215.12#. That is -1.78# yr/yr. The decline in the carcass weight may indicate that the back-log of hogs that occurred because of the holiday kill disruption has now ended and we may be seeing the beginning of the progressively lower spring kill rate. The last H&P report seems to suggest that the kill rate should begin falling 5.0% to 6.0% below the year ago level. I believe that will be enough to drive the component up to where the GGGs are trading and maybe even bump them up a little.

So-

I'm holding a pair of long GGGs.

Pre-opening says that is not a mistake so far.

Best wishes,

dhm