11/23/18 was down -0.57 to 57.23. The ZZZs are trading premium to the component by +0.62. Packers are continuing to provide a larger percentage of the kill than usual. Over the past 200-days the percentage of packer hogs has been 34.31% but for the past 6-days it has been 35.2%.

The 6-day moving average carcass weight firmed to 213.65#. That is -0.44# year/year. Index hogs were also a bit heavier at 212.23#. Packer hogs are heavier than non-packer hogs by 3.01#, It continues to appear that packers have expanded their production capability a significant amount. If there is much more of a decline in the price of Index hogs, more of the marginal producers may exit hog production and packers will be geared up to make up the difference. I'm not saying that packers are trying to force the smaller producers out of business but the numbers seem to say that the larger producers are more efficient end it is efficiency that counts.

Last week when the Z/G spread dipped below -8.50 I piled more onto my boat. Today someone wanted them more than I did so I have been running to the bank. Actually the spreads have been quite active today and I have been busy getting them on and off my boat at a brisk clip today.

But -

The deterioration in the price of the summer futures may siphon-off some of my margin today. I see no reason for the summer futures to be in decline today so I have taken this dip as an opportunity to pile more onto my boat.

Best wishes,

Doc