12/21/17 was down -$0.39 and the model projects that the component on yesterday's kill will drop between -0.30 and -0.60. With their lower bids, packers purchased 76.4% of the moving average daily purchases of total hogs and 85.9% of index hogs. With the Christmas holiday coming Monday, packers are not needing a lot of hogs so the small purchase is not surprising. The GGGs are trading premium to the component by 7.00. It is not unreasonable to expect the index to go up that much by the time we go to cash settlement.

Since there is quite a lot of time until the GGGs go to cash settlement, the changes in the Index don't have a lot of impact on the price movement of the GGGs. The H&P report today might, though! If the mildly declining carcass weights are an indication that producers are getting quite current in their shipments, the number of hogs in the 180# and up category may fall short of consensus. That would be supportive of the price of the GGGs. I study the data for the purpose of helping with trading decisions. On that basis, then, I feel compelled to be long the GGGs going into the report.

But I'm just barely long - like a Nebraska long and not a south Texas long.

I'm a south Texas long in the calendar spreads.

Best wishes,

dhm