MURICO.com Forum

The final Purchase Index for - - -

11/12/14 was down -$0.11 and the model projects that the CME Lean Hog Index component will have a range change of something like +0.10 to -0.20. In other words, it will be nearly unchanged.

Packers made a somewhat "Usual" purchase of hogs yesterday at 94.7% of the moving average daily purchases.

Yesterday packers had 64K more hogs lined up than they had on the same day last week so it appears that producers are fairly willing sellers and packer are not having to bid much stronger to get the hogs they want.

The strength in the December futures has opened their premium over the CME Lean Hog Index to 3.37. From now until the Dec future go to cash settlement is nearly a month and a lot of supply/demand issues will come up between now and then so the "Gap" is not much of an indicator of market movement at this point except it does convey the message that traders are expecting packers to bid higher.

The fact that the 6-day moving average carcass weight has now fallen to just 2.73# suggests that producers have been highly motivated sellers of hogs. My projection is that between 300K and 400K of the kill since 9/1/14 is the result of producers liquidating heavies. From this I am beginning to wonder if the last H&P report had the inventory of market ready hogs inflated by something like 500K to 600K.

If that is the case, the kill rate may be a little disappointing this fall.

I no longer have and out right position in the ZZZs but am short a few Z/G spreads. I little more down and I hurry to the bank. A little more up and I replace some of the spreads I have cashed in.

Best wishes,

dhm