7/11/19 was up less than a penny to 70.77. The NNNs settled premium to the component by +0.28 after taking a 0.55 dip on Friday. The afternoon Purchase Index on Friday was down -0.10 and the model projects the component on Friday's kill will change in the range of +0.05 and -0.25 and that will be one-half of the cash settlement index. It does not appear that much damage will be done by going to cash settlement short the NNNs and there may be a few pennies to be gained..

The six-day moving average carcass weight firmed to 211.24# and that was +3.30# yr/yr. Index hogs were also heavier at 211.10#. Packer hogs were +0.11# heavier than the non-packer hogs. Packers have become much more current in their shipments. If packers are smarter than the rest of us about where hog prices are headed, their reduction in their inventory of market hogs may be suggesting that the price of hogs will continue dribble lower.

By the time the afternoon reports came out on Friday, packers had purchased 107.9% of the moving average daily purchases of total hogs and 100.9% on the Index hogs. Usually on Friday's the percentage will be in the 120% range. Most likely packers will have been buying a bunch of hogs Friday afternoon and we won't know until Monday morning whether or not they were bidding higher in order to pull the hogs in. Cutouts got clipped by -$0.52/cwt on Friday so packers don't have a lot of elbow room to throw much more money at hogs because their margins were already very skinny.

"The Market" seems to be thinking the VVVs may be the big beneficiary of increased exports and the Q/V spread has closed a bit over the past few days. I am long a few Q/V spreads so that is not helping one bit!!

Best wishes,

Doc