The CME Lean Hog Index component on the kill for -

2/18/19 was down -0.59 to 54.08. The JJJs are locked limit down putting the "Gap" at +2.45 with the JJJs premium to the component. I am wondering if this is the wash-out ITZ said could happen or whether this is just the beginning of the wash-out. I forgot that I had three orders working to buy NNNs. When I heard the fill come in, I knew it was NO DINNER bell so I dumped them as fast as I could. My mistake cost me a couple of Benjamin's but I avoided a trip behind the woodshed.

The 6-day moving average carcass weight eased to 215.55 . That is +1.50# Yr/Yr. Producers may be a bit behind in their shipments and that is not good in this market. It is especially the packers who are behind, I think. Packer hogs are +3.41# heavier than the non-packer hogs. Index hogs are steady at 214.70#. Non-packer hogs came down almost 3/4#.

Packers really blistered the producers of negotiated hogs yesterday. They may be the marginal producers and some of them may decide to sell their sows during this wash-out. Packers are continuing to ship a larger percentage of the kill than they did last year. They are seemingly geared up to replace any marginal producers that exit the business.

I piled a pair of long V/Z spreads on my boat at 4.70. On average on this date over the past 8-years the spread has been 4.684. The high during this time period has been 6.13 and the low 2.78. There is a lot of time for this trade to work and a lot of price movement will take place. My thinking is that the wash-out may be over by then and the ZZZs may weaken relative to the VVVs. If China starts importing pork by then the likelihood of the spread going up may be quite good.

Best wishes,