The afternoon Purchase Index for - - -

4/3/19 was up +0.20 and the model projects the component on yesterday's kill will be up between +0.60 and +0.90. The data suggests that packers still have an inventory of more expensive hogs to process that will keep the component rising for another day or so. The JJJs settled premium to the component by +0.98. The model calculates the component will need to gain. If the component on yesterday's kill comes in up 0.65, then the component only need to gain 0.05 per day to close the "Gap". The up-trend seems to be much stronger than that so I have a pair of long JJJs to take to cash settlement. Cutouts dipped -1.45 yesterday and that make packers a bit grouchy and they will not be bidding much higher until they can firm the product.

With their higher bids packers had purchased 77.6% of the moving average daily purchases of total hogs and 86.6% on the Index hogs. If packers want a full kill schedule the rest of the week, they were going to be needing to buy hogs yesterday afternoon.

Best wishes,