5/24/19 was down -0.08 and the model projects the component on Friday's kill will be down between -0.05 and -0.35. The MMMs settled premium to the component by +2.65. The model calculates that the component will need to gain +0.18 per day to close the "Gap". With the component at 83.77 and the carcass cutout value at 83.27, the model calculates that packers are losing -$1.08 on just the product value of each Index hog processed and that is before packers pay salaries, electricity. depreciation, Insurance, water, and dozens of other expenses. Packers do get some other income from trimmings and by products but not enough to make them happy.

So-

Something has to "Give" and it is probably not the packers.

Since 3/1/19 packers have killed 28,991,399 hogs. From the last H&P report, the model calculates that the kill during this period should have been 28,631,424. These numbers might be suggesting that 350K or so of hogs may have been pulled forward. This would seem to fit with the decline in weight of packer hogs over the past few months. That would be a good thing if the trade war causes Chinese imports of American pork to actually decline in spite of China's ASF problem.

You may wonder, "How can the imports possible decline?"

China could begin rationing pork and slap price controls on pork pricesl The USA did that during WWII to control consumption and inflation and it worked. The ASF problem should cause a huge increase in the price of hogs andpork. I am beginning to see that some factors exist that MAY cause it to NOT happen. And limit in the hog market is expanded to 4.50 today.

Best wishes,

Doc