10/2/18 was up +0.17 and the model projects that the component on yesterday's kill will be up between +0.40 and +0.70. Packers seem to be slowing the rate at which they are bumping their bids higher. I am beginning to wonder if the strong uptrend we have seen in hog prices is now coming to an end. There was not much "Stuff" on my boat this morning and it was riding high in the water. Have now added a couple of MMMs and some long Z/G spreads. The GGGs don't often go more than 9.00 premium to the ZZZs. In the last seven years the low for this date has been -6.47 posted in 2016 so we are in record low territory for the last seven years. On average for the last seven years the Z/G spread has settled at -2.663 and the lowest it has been at expiry was -5.69 posted in 2013. In 2014 the ZZZs were actually premium to the GGGs by 4.05 at cash settlement.

But-

It is not the historicals that matter. It's the supply/demand factors here and now and traders seem to be fearful that the ZZZs are going to take a terrible hair cut relative to the GGGs. Maybe "The Market" is right and maybe the market is wrong. I think "The Market" is wrong so I am piling so long Z/G spreads on my boat.

I will hasten to say that sometimes I am right and sometimes I am wrong but I have never made money in the market with out taking a position and assuming some risk. Being flat doesn't make the bank account grow.

Packers purchased 134.6% of the moving average of total hogs and 65.4% on the index hogs.

Best wishes,

dhm