MURICO.com Forum

The CME Lean Hog Index component on the kill for -

4/15/19 was up +0.38 to 80.06. The KKKs are trading premium to the component by +10.54. Clearly traders are expecting this bull run to continue for a while. But just before the close, "The Market" became concerned about the lofty level to which the MMMs had climbed and took them down rather sharply. So I piled another one on my boat. Maybe I am now crusin' for a brusin'. Or maybe the 96-calendar spread trades on my boat will serve as a safety net.

The six-day moving average carcass weight eased to 215.02#. That is +0.11# year/year. Index hogs also dipped a little to 213.61#. Packer hogs are now +4.48# heavier than the non-packer hogs. Packer hogs dipped by 1/3# and non-packer hogs were down 2/3#. I see no reason why hogs should be finishing more slowly; perhaps they are still being pulled forward by these high bids. The percentage of packer hogs in the kill mix was down yesterday. I will be watching to see if the percentage of packer hogs continues to decline. If it does, it may mean that packers are now pulling their hogs forward and that would seem to me to be a bullish sign.

There continues to be some unknowns in the hog market: Will Trump and Xi strike a deal? Where does Mexico stand? Is the ASF virus going to hit the U.S.? Have hogs really been pulled forward a little?

But there are also some knowns: China is the worlds largest consumer and producer of pork and China has a terrible ASF problem going on. The disease has now spread to Vietnam. Exports to China are firm in spite of the 62% tariff. The number of hogs that will be kill over the next four or five months are already on the ground and higher prices will NOT increase that number and the numbers are not huge Chicken production can be ramped up a lot faster than hog production and the Chinese also like chicken.

Best wishes,

Doc