8/20/19 was down -0.61 and the model projects the component on yesterday's kill will plummet between -0.55 and -0.85. With the price of pork on the skids, packers are trying to protect their margins but those margins have been on a downhill roll the past few days.

With their lower bids, packers were able to purchase 81.8% of the moving average daily purchases of total hogs by the time the afternoon reports were released and 89.5% on the index hogs. The producers of Index hogs seem to be quite motivated sellers of hogs. Packers seem to have done a magnificent job of getting quite current in their shipments. Not long ago packer hogs were nearly five pounds heavier than the non-packer hogs and now they are -0.61# lighter. For a while the daily percentage of packer hogs in the kill mix was very high almost hitting 50% and it has now backed-off and yesterday the 6-day moving average percentage was 38.7%.

This may be telling us that when packers are liquidating their inventory of market hogs, the price will be headed lower.

But when is it news that the price of hogs dips when we move into the high-kill fall time period? It virtually always happens with the "Trough" in the seasonality cycle usually occurring
about the time the ZZZs go to cash settlement. This means we can expect the CME LEAN HOG INDEX to go lower - - - a lot lower!! "The Market" is now saying 64.175 when the ZZZs go to cash settlement. When the dust settles this week, I would not be surprised if the ZZZs drop into the high fifties. They almost reached that level last Friday.

Best wishes,

Doc