12/6/16 WAS up +$0.73 and the model is projecting that the component on yesterday's kill will be up between +0.40 and +0.70. The ZZZs settled premium to the component by +2.07. Traders mindful that packers have nice margins and they are clamoring to see who gets to kill the hogs.

Packers made only a modest purchase yesterday with their higher bids - 82.4% of the moving average daily purchases.

Looking back, it is fairly apparent that the higher than expected kill rate between Labor Day and Thanksgiving was producers liquidating their inventory of market ready and near market ready hogs. Falling carcass weights by non-packers and progressively higher carcass weights on the packer hogs should have been a warning sign that the inventory of market hogs was NOT greater than projected by the USDA but a deviation from the normal shipment pattern. Fortunately the Hog Pricing model caused me to shift from short to long in time to keep from losing my shirt and yesterday the calendar spread trades came alive and so I am able to live and trade another day.

The shorthog puts are working well and I added a couple more long ZZZs in front of the close. Looking at the pre-opening, that was not a stupid decision.

Best wishes,

dhm