I continue to look for the "Trough" in the price of the CME Lean Hog Index for this "Hog Cycle" and I don't think the component of 63.58 posted Friday on Thursday's kill was it even though it was down -0.99 cutting Friday's closing "Gap" to -3.15 with the VVVs at a discount to the component.

Here is why I don't think 63.58 was the "Trough":

1. We saw bellies drop another -2.50 Friday dragging the cutouts down -1.44 to 77.76. Last year on this date cutouts were at 80.34. The strong demand we had been seeing seems to be fading and there is plenty of chicken and beef competition for the consumers' dollars.

2. We saw the kill last week come in at an estimated 2.432 million head or +2.70% over the same week in 2016. The last H&P reports seemed to suggest it should have been up 3.48% so there may have been nearly 20K head of hogs finished last week but they didn't keep their appointment at the packing plants. The model projects there are now back-logged in producers' barns about 340K of hogs getting heavier and heavier.

3. We saw the 6-day moving average carcass weight firm to 210.99# and that is 1.40# over the same day last year. This is consistent with the data that seems to show producers are somewhat behind in their shipments.

These numbers don't seem to be consistent with the futures market striving to make a limit up move on Friday but as Long Bear often said, "In the hog market you can always expect the unexpected!".

I might add also that we saw my wallet get somewhat thinner as "The Market" clawed back a portion of the gains I had deposited into my bank. At least I know that it is now in the hands of some of my cyber Friends!

I remain hopeful that the data has not lead me astray and some of that money will be returning in the coming weeks but Douglas E. Zalesky's trading rule #14 says, "Don't speculate!
If you do, you will lose." and this trade of following the data may be "Speculating"!

Best wishes,

dhm