12/12/18 WAS down -0.08 and the model projects the component on yesterday's kill will ease between -0.05 and -0.25. Yesterday the ZZZs settled discount to the component by -0.78. There are three more days of data coming to get us to cash settlement. The Index seems to be on a mild trend lower so that "Gap" may be just about right for the cash settlement. I will be taking a couple of ZZZs to cash settlement but they are wrapped up in a bunch of options so it does not reflect a negative bias on my part.

Yesterday packers purchased 89.5% of the moving average daily purchases of total hogs and 101.0% on the Index hogs. This may be an indication that producers are quite anxious sellers and packers are NOT very aggressive buyers.

Yesterday the component dropped -0.06 to 55.51. It continues to look like the low for this Hog Cycle was set on 9/3/18 when the index dipped to 45.30 and we are now in the chase for the next cycle high. If the ASF virus takes it toll on the world hog population, there is no telling how high the INDEX might get. I will keep buying dips on the summer futures and selling rallies as well as working the spreads and selling a little option premium.

Best wishes,

Doc