MURICO.com Forum

The CME Lean Hog Index component on the kill for -

3/25/18 was UP 2.23 to 68.49. That was quite a bit more of a jump than the model projected. The JJJs are now trading premium to the component by 11.03. Over the past 6-days the component has gained an average of 1.92 per day. If that rate were to continue, the JJJs would go to cash settlement at 94.46. I don't expect that rate will continue but we are definitely in a strong up-trend. The model is now calculating that it takes an average gain of +0.82 to close the "Gap"

The 6-day moving average carcass weight eased to 215.04#. That is +0.31# yra/yr. Packer hogs were -1/5# and non-packer hogs were down -3/5#. These higher bids may be pulling hogs forward a tiny bit. Packer hogs are +4.71# heavier than the non-packer hogs and packers are shipping a couple of percentage points more of the kill mix than they shipped last year, Packers have vertically integrated their operations quite a bit in the last year and the heavier carcass weights add a lot of poundage.

This morning I took profits on a long J/K spread and two short N/Q spreads. Flipping a few calendar spread trades keeps me from getting bored and dumping some of the deferred lean hog contracts on my boat.

Best wishes,

Doc