11/10/17 was down -0.42 to 67.26 and that is very much in line with what the model projected. I continue to be impressed with the high correlation between the model's projections and the actual change in the component. This makes the model a handy trading tool when the front month gets to be short term. The drop in the ZZZs this morning has opened the "Gap" to -5.03 with the ZZZs at a discount to the component. Traders are telling us that there is plenty more bid cutting on the part of packers as we move toward Thanksgiving.

They may be right.

Or -

They may be wrong.

The 6-day moving average carcass weight moved up to 212.47#. That is +0.98# year over year. Two weeks ago it was -0.57# year over year. My read on this is that it suggests that producers are slipping behind a little in their shipments. Generally carcass weights have a tendency to climb a little this time of the year but when they climb more than they did last year I begin to wonder if packers are backing hogs up a little bit. Index hogs were also a bit heavier at 212.58#. Packer hogs are heavier than non-packer hogs by +0.88#. Both packer and non-packer hogs were a bit heavier yesterday.

This morning I thought the sell-off in the ZZZs was a little severe so I covered most of my short ZZZs. The trend is still down and the packers are producing a lot of pork to peddle so I will sell them again if we get a bounce later this afternoon. China may be in the market for a little pork to feed her 1.3 billion people. That many hungry mouths can gobble up a lot of pork if they get the chance.

If Xi has invited Trump to China to work on a pork deal to feed his people, the down trend in hog prices may be reversed.

Best wishes,

dhm