1/14/19 was up +0.51 to 57.96 and the GGGs settled premium to the component by +4.19. There are 22-data-days until we go to cash settlement. The model calculates that the component will need to move up an average of +0.185 per day to close that "Gap". The component has gained an average of +0.65/day over the past five days. There is a problem, though - bellies had a major hiccup Tuesday and I wonder, "Is that the first sign that demand is faltering?"

Looking at what packers had paid for hogs they processed on Monday, they were all over the place - some up, some down and others unchanged. Weather may have been a factor with higher bids being needed to induce some producers to fight the cold to ship hogs. Over the past 10-days or so packers have been shipping large numbers of hogs. Some days nearly 40.0% of the kill was packer hogs. One year ago the percentage was running less than one-third packer hogs. And packers are continuing to finish their hogs heavy - +3.36# heavier than the non-packers. During the first two-days of this week the kill has been +12.53% higher than one-year ago. That amounts to a lot of pork for packers to move out and they were getting the job done quite well except for the bellies.

The 6-day moving average carcass weight dipped to 215.71# on Monday. That is +1.25# year/year. It was especially the packer hogs that were lighter although index hogs were also a bit lighter at 215.05#.

The weather may be cold enough in some areas to slow down hog-growth and make shipping a challenge.

The up trend in the index is strong enough to keep me long a couple of GGGs but I have reduced the number of summer futures I am HODLing and I am able to get some of the calendar spreads on and off my boat. Yesterday it was the long N/Qs that gave me some profits and I am HODLing a couple of long K/Ms.

Best wishes,

Doc.