The CME Lean Hog Index component on the kill for -

1/16/19 was up +0.21 to 58.29. That fit very nicely with the model's projection. The GGGs settled premium to the component by +2.53. The model calculates that the component will need to gain an average of +0.125 /day for the next 20-days to close that "Gap". Over the past six-days the component has gained an average of +0.47 / day.

The six-day moving average carcass weight moved up to 215.84#. That is +1.32# yr/yr. Packer hogs are heavier than non-packer hogs by 3.37#. Index hogs were up a bit at 214.27#. Packer hogs were heavier by about +1/4# and non-packer hogs were down by about -1/5#. Packers just keep finishing their hogs to heavier and heavier weights and they are shipping a higher percentage of the kill mix. On 1/16/18 packer produced hogs made up 37.09% of the kill mix. One-year ago it was less than 33%.

I am suspecting this means packers are bullish hogs but it may mean that packers are wanting to control hog production from conception to pork chops in the retailers' cases. With cutouts being up and the up-trend in both the Purchase Index and the component continuing, it is possible that the GGGs may stabilize or even move up a little from here. Somewhat lower is also possible.

I am still long GGGs and HODLing some summer futures.

Best wishes,