This morning when I gathered up all of the hog data, my Hog Pricing Model projected that the Purchase Index for 2/26/16 would actually be UP +$0.34 and the component on the 2/26/16 kill would climb between +0.10 and +0.40. Of course there can be a significant shift in the numbers when the morning reports come out on Monday.

The data seems to be giving a bit of an indication that we are not going to get the usual decline in the Index that we see on average as we move toward the expiration of the JJJs. My bias is that this year will be a bit more like 2012 when the Index gained 4.91 from this date until expiry or like 2015 when it gained 3.44 and definitely NOT like 2015 when it dropped -28.20.

Apparently this is what the majority of the traders are also thinking because they have pumped the JJJs up to a premium of +4.15 over the component. I am not prepared to see the K/M spread tank to -8.04 like we saw in 2012 or the drop to -8.525 that we saw on 3/24/15. But I suppose it could happen when whether I am prepared or not.

Best wishes,

dhm