2/26/18 was UP 15.5 TO 52.84. That was quite a surprise to see the component up in view of the rather weak Purchase Index this morning. Is it possible this is signaling that the supply of hogs is tightening up or is it just that producers are having trouble shipping hogs in this cold weather? So far this week the kill is trailing the same week last year by -2.75%. Packers are still producing a lot of pork and today they had trouble selling it and had to take a buck thirty-nine less on the cutouts. That is not what it takes to keep the blip-up we saw in the component today going.

The 6-day moving average carcass weight edged lower to 214.86#. That is +0.03# year/year - another slight hint that perhaps producers are fairly current in their shipments and the back-long is small or maybe even non-existent. Index hogs were also lighter today at 213.24# and as usual packers are finishing their hogs heavier than the non-packers and today it was +3.27#. And the percentage of packer hogs in the kill mix continue to suggest the packers are continuing to vertically integrate their operations.

On the dip today I piled a long GGG-20 and a long JJJ-20 on my boat. By then there is a good chance that pork will be in short supply in China and tariffs will be low enough to facilitate pork exports and I was also able to hurry to the bank with profits from a long V/Z spread.

Best wishes,

dhm