Cash was mostly $1.00 higher yesterday and not steady to down $1.00 as billed on the noon report. Packer margins have actually been restored with the hog carcass performing nicely last week. The hog carcass gained $3.87 last week and tacked on another $1.33 yesterday. Bellies are starting to rip. When the belly market gets tight wild things can happen. Open interest continues to pour into the late summer and fall hog contracts. Open interest in Aug LH jumped 1,100, Oct up 1,600 and Dec increased by 1,500 in yesterdays action. We continue to get confirmation from multiple sources regarding the damage sustained to the Chinese pig herd from ASF. Reports recently out of Vietnam have been quiet. The latest estimate Ive heard is that 10% of their herd may be lost which would be 3 million pigs. This is just a guess as the disease is likely still spreading in Vietnam as well as in China. The bullish situation will have a very long tail as breeding numbers have been severely depleted. Repopulation will be very slow as the disease continues to spread. Smithfield Foods is being tight lipped but as a public company theyll eventually have to report their situation to shareholders. Im hearing theyre rapidly retooling plants to split carcasses for direct shipment to China. Three items, if they occur, will contribute to another massive leg upward in hog prices. These are: 1) continued large sales on weekly export reports accompanied with increased shipments, 2) the removal of tariffs on U.S. pork from both China and Mexico, and 3) confirmation from the Chinese government that their ban on Payleen-free pork is removed. Final note, Im already hearing that non-Smithfield plants are retooling to split carcasses with likely means the Payleen-free requirement has already been unofficially lifted. Were interest in taking partial profits on June calls with our next trigger target 100.50.

I plan on taking a few days off next week and will be trying to reduce my position some more. I sold half of my Oct position this morning for a handsome profit!

Good trading to all,
Dewey