6/28/19 was down -0.96 to 74.48. The model had projected the component would be down between -0.50 to -0.80 when the final Purchase Index came out. It appears that the NNNs will settle discount to the component by -1.78. The model calculates that it will take and average daily decline of -0.18 in the component to close that "Gap". Over the past seven days the component has dropped an average of -0.52 per day. If the decline were to continue on that trajectory, the cash settlement index for the NNNs would be 69.58. Quite obviously I don't know what is going to happen over the next ten days ut it does appear to me that packers will need to scare up some demand for the product is they are going to become aggressive buyers of hogs at higher prices. It just doesn't work to pay more for the carcasses than the cutouts fetch and still have to pay salaries, utilities, etc, etc.

The 6-day moving average carcass weight eased to 212.80# that is +4.71# yr/yr. Index hogs were also a bit lighter at 212.80#. Packer hogs were -0.06# lighter than the non-packer hogs. It appears that packers are now much more current in their shipments. This may be setting the stage for the Index to begin climbing but it seems to me that first the cutouts will need to show some life.

I am still short the NNNs and long the 2020 lean hog futures. Being long the deferred futures was a good idea but being short the NNNs was not that brainy of an idea.

Best wishes,

Doc