4/2/19 was up +0.11. Packers probably have an inventory of more expensive hogs purchased and the model projects this will push the component on yesterday's kill up between +0.60 and +0.90. The JJJs settled premium to the component by +1.67. Assuming we get a move up of +0.60 on yesterday's kill, the model calculates that it takes a daily gain of +0.14 to close that "Gap". For the last 11-days the component has gained an average of 1.85 per day. Cutouts have been on a strong upward trend but yesterday they dipped -0.44. Is demand now softening a little? This is the time of the year when supply is slipping and prices the CME Lean Hog Index tends to tend to gradually climb a little until we get to the Independence Day holiday. Being long the JJJs to go to cash settlement seems to be a reasonable risk.

Yesterday packers purchased 87.7% of the daily moving average purchases of total hogs and 91.8% on the Index hogs by the time the afternoon report came out. That is about what I would expect on a Tuesday.

Best wishes,

Doc