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The CME Lean Hog Index component on the kill for -

10/1/19 was up +0.44 to 58.04. The VVVs settled premium to the component by +4.16. The model calculates that the component will need to gain an average of +0.49 per day to close that "Gap". On average over the past seven years the Index has gain +0.83 from this date until cash settlement. The most it gained was 5.85 in 2012. In 2013 it lost -4.88. We may be in for a bumpy ride as the VVVs move toward cash settlement.

The 6-day moving average carcass weight was steady at 211.11#. That is +1.70# yr/yr. Packer hogs are lighter than the non-packer hogs by -0.84#. Packers are quite current in their shipments.

The afternoon Purchase Index was up +0.65 and the model projects the component on Wednesday's kill will be UP between +0.30 and +0.60. With their higher bids packers purchased 72.9% of the moving average daily purchases of total hogs and 91.6% on the Index hogs. Packers may have been short-bought hogs by the time the afternoon reports were released. Oft times when this happens, packers will end the day bidding higher.

It continues to appear that we posted the seasonality low on 9/24/19 at 54.67. So we are now likely looking for both the next seasonality high as well as the crest for the next Hog Cycle. The last Hog Cycle low of 45.3 was posted on 9/3/18. The last crest was 134.17 posted on 7/16/14. World wide, with the large numbers of hogs lost in China, the dynamics seem in place to match the last Hog Cycle crest. But there is a trade war going on and I don't know how to factor that into the supply/demand equation. Realizing how strong hogs could rally, F.O.M.O. (Fear Of Missing Out) has me HODLing a handful of QQQs and trading some MMMs and NNNs from the long side. I had a lousy first half of the year but things are now beginning to fall into place.

Best wishes,

Doc

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The CME Lean Hog Index component on the kill for -
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