the impression that the USDA may have over-stated the 9-1-14 inventory of market hogs by something in the range of 300K to 600K.

But I don't know if that is enough to put a pinch on pork production sufficient to push cut outs higher and if it does, how much higher? Packers' margins are not great so they have little incentive to pump their bids up much until cut outs show a little strength.

It appears that traders pumped the ZZZs up a little too much when they drove them to a premium of nearly five bucks over the index. Earlier Thursday the premium was down to a buck. If it gets down there again, I'm going to get long the ZZZs based on my view that pork supply may tighten up a little if producers liquidate a few more of their heavies. I think they have already ballooned up the kill since 9-1-14 by 300K to 600K in the process of liquidating heavies.

I have more of the Feb cattle/hog spreads than I should have. I have scaled in and out six or eight times and that enabled me to build up a little cushion to weather Thursday's rally. If they bump above 82.25, I will scale on another even though I will be violating my trading rule of "Never add to a losing position!" I justify it because of the scaling profits already at the bank.

Best wishes,

dhm