1/31/17 was up +$0.65. That is the biggest one-day jump we have seen for a couple of weeks. The model projects that the component on yesterday's kill will move up between +0.20 and +0.50. Yesterday the GGGs settled premium to the component by +0.29. It looks like that premium will be erased when we get the 11:00 report and the component on yesterday's kill.

Even with their higher bids, packers only made a fair purchase yesterday at 82.5% of the moving average daily purchases. As you look at the cutout prices, it is easy to see why packers are chasing hogs and the cutouts are being driven higher by the bellies. They are on a "Holy Terror" higher. There is a lot I don't know about the distribution of pork but I notice that the amount of pork covered by the cutout report represents about 4% to 8% of the daily pork production. That means that most of the pork is marketed and we are blind relative to the price. So there is the possibility that packers have forward priced some port and they are now finding themselves short-bought and they are scrambling to find the hogs to meet their commitments. Just don't know but I do know that the price of hogs is on a strong up-trend.

Yesterday I sold a part of my load of GGGs and today I am wishing I had them back. But I do have some left on my boat.

Best wishes,

dhm