MURICO.com Forum

The final Purchase Index for - - -

7/12/19 was down -0.17 and the model projects the component on Friday's kill will drop between -0.05 and -0.35. This will be 50% of the cash settlement index for the NNNs. This morning I sold another of the NNN pigs at 71.05. It appears I will pick up a Big Mac or two on it and might even get a Benjamin or two. I have orders working to sell more if we get another bounce to 71.10. I have never gone to cash settlement with this many expiring contracts and it appears the short NNNs are going to treat me quite well.

Friday packers purchased 105.6% of the moving average daily purchases of total hogs and 96.1% on the Index hogs. Those are low numbers for a Friday. It is usually up in the 120% range. My thoughts are that packers didn't want to load up with a bunch of hogs with their margins being in the pits. If I am reading the data correctly, it seems to follow that there is going to be some more weakness in the CME Lean Hog Index. In the longer term picture, China still has a ASF problem and the Chinese still like pork. There is a good chance that Trump and Xi will come to some sort of an agreement and the American farmers will do what they can to satisfy their short fall. This makes being long the summer 2020s a reasonable risk which I am willing to take.

The Kill since 6/1/19 is coming in almost exactly as projected from the last H&P report. If this suggests that the last H&P report was a good one, then it seems to follow that the kill rate will begin to taper off a little as the 120# to 179# category of hogs begin to come to market over the next week or so.

BEst wishes,

Doc