MURICO.com Forum

The CME Lean Hog Index component on the kill for -

10/4/18 was up 0.22 to 69.42. The VVVs are trading discount to the component by -1.20. The prospects are fairly high that the component will be up again tomorrow because packers still have some more expensive hogs purchased that don't appear to have been processed yet.

The six-day moving average carcass weight firmed to 210.21. That is -0.32# yr/yr. It appears that hogs are beginning some compensatory growth now that the weather is cooling and fresh corn is coming on line. Packer hogs are +1.93# heavier than non-packer hogs although both packer and non-packer hogs were a bit heavier today. Index hogs were a bit heavier but they are lighter than the rest of the hogs at 209.32#.

The 200-day moving average kill has been 33.98% packer hogs but for the past six-days packer hogs have been 35.16% of the kill mix. With packer hogs being heavier by nearly two pounds, the higher packer kill rate is NOT depleting the inventory of packer hogs, apparently. Oft times when the percentage of packer hogs in the kill mix moves up, it is an indication that packers are liquidating hogs in front of a price decline. At this point I can't tell whether that is the case or whether packers have expanded their production capability and the new norm is going to be packer hogs making up 35% to 36% of the kill rather the than the 33.5% to 34.5% we have seen for some time. At any rate, packers or aggressively selling their hogs. Wth the ZZZs trading discount to the component by -11.87, "The Market" is taking the position that the Index is headed lower. The V/Z spread is really wild, in fact it is so wild that I am not touching it but have loaded my boat with some long Z/G spreads and have now take profits on many of them.

Still long the VVVs and summer futures and continue to buy dips and sell rallies.

Best wishes,

dhm

Messages In This Thread

The CME Lean Hog Index component on the kill for -
Re: The CME Lean Hog Index component on the kill f