3/28/19 was up 0.68 to 72.88 and the model projects the component on Thursday's kill will move up between +1.00 and +1.30. The JJJs settled premium to the component by +6.00. The model calculates that the component will need to move up 0.52 per day to close that "Gap". Over the last 8 days the component has gained an average of +1.99 per day. Cutouts were lower yesterday by -0.42 but it appears to me that packers' margins are still in fairly good shape with cutouts being 7.50 over the component.

By the time the afternoon reports came out, packers had purchased 84.8% of the moving average of daily purchases of total hogs and 97.9% on the index hogs. Producers of index hogs seem to be keeping quite current in their shipments. The reason I say that is because the index hogs are lighter than the six-day moving average carcass weight and quite a bit lighter than the packer hogs. Packers have really been throwing a lot of money at the negotiated hogs. Since 3/15/19 they have jumped about $20.00/cwt. That is a lot of gain in a hurry and may be indicating that packers are hungry for hogs.

After the H&P report came out, I took some time to compare the kill from 3/1/19 with projections from the H&P report. The report pegged the 180# and heavier category of hogs to be up 1.60%. The kill since 3/1/19 has been up 2.42%. Either 280K of hogs have been pulled forward since 3/1/19 by the escalating packer bids or else there were 280K hogs more in the 180# and up category than the USDA reported. Lately the H&P reports have been quite good so my bias is that some pulling forward is occurring. The fact that the carcass weights of negotiated hogs has fallen to 200.00 pounds is consistent with hogs being pulled forward. Packer hogs on the other hand came in at 217.37#. That is quite a difference in weights.

As expected, my margin suffered yesterday. If limits expand to 4.50 and we get another limit down move to end the week, my weekend will be shot.

Best wishes,

Doc