9/12/19 was down -0.63 and the model projects the component on yesterday's kill will drop between -0.80 to -1.10. Producers of "Negotiated" hogs are really being hammered. This will likely drive some of them out of business and packers seem to be stepping up to take up the slack.

Packers purchased 84.3% of the moving average daily purchases of total hogs yesterday and 87.1% on the index hogs by the time the USDA released the afternoon reports. The kill this week is running somewhat higher than projected from the last H&P Report. This is probably a little "Catch-up" from the low kills the previous two-weeks when hogs seemed to have been backer up a little.

Backing up hogs and then lowering their bids seems to have enabled packers to have firmed the price on cutouts a little and at the same time they cut their bid prices. The model calculates that packers' gross margins on Index hogs have now moved up to $23.05/index hog. That is a great improvement over thse red ink we were seeing but hardly enough to send packers wildly chasing hogs but it may slow down the down trend in the CME Lean Hog Index.

The CME Lean Hog Index seasonality high of 84.68 set on 8/2/19 is holding so we are now searching for the seasonality low. There is a powerful tendency for it to occur about the time the ZZZs go to cash settlement. "The Market" thinks we might be close to the seasonality low now. You and I both know that the CME Lean Hog Index will not lollygag around 61.46 from now until the ZZZs go to cash settlement. We are going to see some movement and the recent volatility would suggest it will be both up and down. Unless there is some break in the "TRade War" my guess is the the seasonality low will be below where we are currently.

In a good faith gesture, China relaxed some of their trade tariffs but not any that were agriculturally related. And I ask myself, "Is Xi keeping the economic pressure on the agricultural segment hoping to erode a part of the base of support Trump has hoping to be able to get a different president to negotiate a trade deal with?"

And I answered myself, "Probably!"

Best wishes,

Doc

P.S.: Hey, ITZ! Don't hold your breathe waiting for the ZZZs to hit 70. It may happen but not this week.