MURICO.com Forum

The CME Lean Hog Index component on the kill for -

9/30/19 was up +0.87 to 57.60. The VVVs settled premium to the component by +4.95. The combination of the VVVs backing down and the component moving up did a lot of "Gap" closing yesterday. The model now projects the component will need to add +0.52 per day until cash settlement to close that "Gap". Still quite a tall order but reasonably realistic. In 2012 from this date until cash settlement the index gained +5.95 and in 2013 it lost -5.42. On average over the past seven years the index has tacked on +0.93. I have covered most of my short VVVs so with a boat the is nearly empty of VVVs I have some space to sell more if there is a nice bounce. I also want to sell some M/N spreads in the 1.00 range. Yesterday I took profits on most of the short M/Ns on my boat.

The 6-day moving average carcass weight eased to 211.43#. That is +1.82# yr/yr. Index hogs were steady at 211.66#. Packer hogs are lighter than the non-packer hogs by -0.10#. It looks like producers are getting quite current in their shipments.

The afternoon Purchase Index was down -0.27 and the model projects the component on yesterday's kill will will change between +0.15 and -0.15. A move significantly different from that will not surprise me. By the time the afternoon reports were released packers had only purchased 67.9% of the moving average daily purchases of total hogs and 90.1% on the Index hogs. Most likely the morning reports will show that packers bought a lot of hogs yesterday afternoon and they may have had to sweeten their bids to pull them in.

Best wishes,

Doc