11/29/17 was up +$0.44 and the model projects that the component on yesterday's kill will change in the range of -0.05 to +0.25. Packers may have enough less expensive hogs in inventory to keep the component from moving up very much on yesterday's kill. But we may be seeing a trend reversal. Last year from this date until the ZZZs expired the index jumped about nine points. "The Market" seems to be expecting somewhat of a rally in the index this year also.

Yesterday the ZZZs settled premium to the component by +2.19. If there is a move up in the index anywhere like we saw last year, the ZZZs may be pushed up a point or two by the index. Cutouts were strong yesterday so my guess is that packers' margins are in fine shape. If foreign demand likes pork at these lower prices, now might be the time for them to book their purchases. I'm not very bullish but I am bullish enough to have sold some calls and covered them with long futures. My objective is to harvest a little option premium and hopefully the amount of premium I have received will defend me against any down-move.

Best wishes,

dhm