11/30/17 moved up by +0.33 to 63.42 and the ZZZs settled premium to the component by 1.85. Cutouts on Friday were +9.32 over the same date one-year ago. I think this means that packers' margins are in fairly good shape.

One-year ago the index was in a fairly strong up-trend after producers had seemingly rushed hogs to market in the weeks leading up to Thanksgiving Day. I was thinking in late October and early November of 2016 that there might be a glut of hogs in December that would test the packers' kill capacity. It appears that a lot of producers were thinking the same thing and that caused the rus-th of hogs to market prior to Thanksgiving. This resulted in a mild shortage of hogs leading up to Christmas and a major move up in hog prices in early December 2016.

Have producers once again pulled hogs forward and we are now facing a rally similar to last year's?

I hardly think so but the kill last week was soft being DOWN -0.31% from the same week one-year earlier and the last H&P report suggested it should have been about +3.5%. The Purchase Index has now reversed and moving higher. It is still too early to tell whether or not this is the beginning of a longer term up-trend but it is suggesting that the strong down-trend has been halted and bottoming action is in place. The strong demand we are seeing for pork and the weak kill last week makes me think that the index will rally enough in the next ten-days to close the "Gap" AND push ZZZs up a point or two so I want to have a bullish bias to my hog portfolio. Some time ago chose to satisfy this bias by selling some calls and covering them with long futures and by buying some Z/G spreads. I am now ready to begin testing the up-trend with some outright long ZZZs.

Best wshes,

dhm