1/30/17 was UP +0.31 to 68.78. The surge in the GGGs has essenially closed the "Gap" so the GGGs can move in lock-step with the index going into cash settlement. It appeared to me that there was no fundamental reason for th's e GGGs to be trading at a discount to the component so today's jump by the GGGs was not much of a surprise.

The thing that was a surprise was how much the 6-day moving average carcass weight dropped. It came in thiIs morning at 213.04#. Packer hogs are now just 3.73# heavier than the non-packer hogs. Packer hogs dipped by -3/4# and non-packer hogs dropped 1/2#. It just might be that these higher bids are pulling hogs forward and even with the higher bids, packers are not getting the hogs they want so they are running more of their own hogs through the plants dropping the carcass weight of the packer hogs relative to the non-packer hogs. The kill rate seems to be holding up quite well so it is probably demand that is pushing packers to chase hogs which they are willing to do since their margins are favorable.

I have been trying to scalp the GGGs this morning but each time I sell a long thinking there will be a dip, the GGGs go higher This can't go on much longer or I will be out of GGGs. But I will have a somewhat thicker wallet. I have plenty of calendar spreads so I am not getting short on inventory to work with.

Best wishes,

dhm