MURICO.com Forum

The afternoon Purchase Index for - - -

7/19/19 was up 0.82 and the model projects the component on Friday's kill will jump between +0.45 and +0.75. The QQQs settled premium to the component by +11.15. That is a mighty big "Gap", that's for sure! The thing about it, though, is the index and the cutouts have now swung into an up-trend. Since the up-trend began three days ago, the component has gained an average of 0.733 per day. If that increase continues, the model projects the cash settlement index for the QQQs would be 86.29. The model calculates the component needs to gain an average of 0.60 per day to close the "Gap".

Today cutouts tacked on +$1.93/cwt. That gave packers the where-with to bid quite aggressively for hogs Friday afternoon. For the week cutouts gained 6.88. That is an average of +1.38/day. If this is the "Tip of the iceberg" so to speak of Chinese demand starting to show up, there will be a lot more to come. I have seen nothing to suggest that the Chinese are beginning to buy American pork but logic would suggest it will probably happen at some point in time if Trump and Xi keep taking.

I am plenty happy to have covered that pair of short QQQs early Friday when they dipped a little. I had orders to get long if they dipped a little more but it didn't happen.

Looking at the way packers are bidding for hogs and the way they are selling the pork, the stage may be set for the CME Lean Hog Index to take out the current seasonality high of 84.59 posted on 5/17/19. If that happens, we can then get serious about chasing the next Hog Cycle crest. The last Hog Cycle crest was posted on 7/16/14 at 134.17. It was followed by a "Trough" of 45.30 posted on 9/3/18. The Hog Cycle is the "Granddaddy" of all production cycles and in the words of Samuel Brenner, just as sure as the sun comes up in the morning, the price of hogs is going to go up and down. That's not quite the way he said it, but that is what he meant.

And now the trend is UP! It won't be straight up. There will be dips and rallies and some may be rather severe as we work toward the next Hog Cycle crest.

Whether you win or lose, there is some comfort in the words of Rudyard Kipling from the poem "IF":

If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breathe a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: ‘Hold on!’

If you can talk with crowds and keep your virtue,
Or walk with Kings—nor lose the common touch,
If neither foes nor loving friends can hurt you,
If all men count with you, but none too much;
If you can fill the unforgiving minute
With sixty seconds’ worth of distance run,
Yours is the Earth and everything that’s in it,
And—which is more—you’ll be a Man, my son!

Best wishes,

Doc

Messages In This Thread

The afternoon Purchase Index for - - -
Re: The afternoon Purchase Index for - - -
Thanks for your post, Ruokani - - -
Re: Thanks for your post, Ruokani - - -