2/12/18 was down -0.49 and the model projects the component on yesterday's kill will drop between -0.30 and -0.60. The GGGs are trading discount to the component by -0.68. I generally like to go to cash settlement with a few of the expiring futures but this time I am not seeing much opportunity so my go into cash settlement flat the GGGs.

Packers purchased 95.3% of the moving average daily purchases of total hogs and 94.5% on the total hogs. Packers were really bidding lower on the negotiated hogs and the producers of negotiated sold a higher than usual number of hogs. There is a good chance that some of the producers of negotiated hogs will be forced out of the business or maybe they will have to change their business model and use their facilities to raise contract hogs for the packers. It appears that packers are moving in the direction of owning more of the hogs that are processed.

Best wishes,

dhm