6/12/19 was down a measly -0.04 and the model projects that component on yesterday's kill will drop between -0.15 and -0.45. The MMMs settled discount to cash by -0.53. Obviously "The Market" thinks the CME Lean Hogs Index will dip a bit more today and tomorrow.

Maybe "Yes" and maybe "No"!

In gathering together the data from yesterday, I noted that a much higher than usual number of negotiated hogs were purchased in the Eastern Corn belt market and packers were bidding "UP" to gt these negotiated hogs. I believe the negotiated hogs producers are the marginal producers and when packers are hungry for hogs, this is where they have to go to round-out the kill schedule. Smithfield has a heavy penetration in the Eastern corn belt, I think and so I wonder, "Is this the first early hint that export demand to China is about to come to fruition?"

Yesterday the model had projected the component on Tuesday's kill would be down, but it was actually "UP". Not much but a swing from a "Down" projection to actually being "UP" gets my attention regardless of the size of the "UP" move.

In watching the 6-day moving average carcass weight of hogs, on 3/8/19 packer hogs were at 218.06# and 4.5# heavier than the non-packer hogs. Yesterday packer hogs were at 214.87# and -0.11# lighter than the non-packer hogs. The data may be saying that packers have liquidated a fair number of their market hogs or at least become very current in their shipments and now they may be turning to the negotiated hogs to fill out their kill needs.

By the time the afternoon reports came out, packers had purchased 102.5% of the moving average daily purchases of total hogs and 102.8% on Index hogs. Those are quite high numbers for a Wednesday afternoon. Fridays tend to be the large purchase days. It is not unusual for the CME Lean Hog Index to move up a bit about the time the MMMs go to cash settlement because retailers are gearing up for the Independence Day grill.

And so I wait and watch the data and try to understand what it is saying. I am just about to talk myself into getting long a few MMMs to go to cash settlement if they dip a little. That would be going counter to what the market seems to be saying.

Best wishes,

Doc