1/18/19 was up +0.05 after having been down -0.25 on Thursday's kill. The component now stands at 58.09 and the GGGs settled premium to it by +3.13. The GGGs settled premium to the component by 3.13 and it takes an average daily gain of +0.17 to close the "Gap". Over the past 6-days the component has risen an average of +0.20 per day. This seems to suggest that the GGGs are priced just about right but technical/emotional factors will create enough volatility to give us plenty of opportunity to scalp in and out of the GGGs over the next fw weeks. I prefer to buy dips and sell rallies and right now I am looking for a dip to re-load a couple of GGGs. I still have an array of summer futures waiting for a rally higher.

The 6-day moving average carcass weight weight firmed to 215.85#. That is +1.10# yr/yr. Index hogs were up a little at 214.86#. Packer hogs continue to be heavier than non-packer hogs by +3.04#. The percentage of packer hogs in the kill mix has dipped a little but it is still a couple of percentage points higher than it was one-year ago. Packers are wanting to take control of hog production and they seem to be getting the job done.

China's agricultural minister seems to be saying that they have the ASF virus under control. Having it under control may not equate to "Solving the Problem". Some producers may be liquidating breeding stock and not replacing them as a defensive measure to control their risk. If this is the case, a severe shortage may be coming and I don't know exactly how to track the time line relative to when it will occur. The liquidation phase of the hog cycle generally produces an abundance of pork the exacerbates the decline in prices and when to price drop is over and production crashes, the price rally can be exaggerated.

This calls for vigilance and a little luck would help, too.

Best wishes,

Doc