10/16/19 was up +0.22 and the model projects the component on yesterday's kill will move up between +0.20 and +0.50. On average this time of the year we are looking for the seasonality low which tends to arrive about the time the ZZZs go to cash settlement. This year it appears the seasonality low was posted on 9/24/19 at 54.67. The fact thatay we are looking for both the seasonality high and the next Hog Cycle high this time of the year is, in my view, quite constructive and indicates strong demand in the face of the large amount of pork that packers are now producing.

We all know where that demand is coming from and why - no secret there, but the fact that it now seems to be happening is good news. If the 69% inflation in pork prices that is reported in China translates into a 69% inflation here, the model calculates the summer futures may reach 110. That may be a seasonality high but I keep looking at the last Hog Cycle high of 134.17 set on 7/16/14 and thinking that before the dust settles we may see the CME Lean Hog Index reach that level once again; the question is, "When?"

I say that because it is going to take years for the Chinese to get their hog production back up to the pre-ASF level.

Hog prices will not go up in a straight line fashion.

That is not the way markets behave.

Because of the uncertainty involved, we will most likely see an unusual amount of volatility as the "Big Dogs" run prices up and down tugging at the emotions of the producers trying to hedge their production and stripping them of their margin. I hope my emotional control will be sufficient to keep from getting my margin stripped!

Yesterday packers purchased 84.0% of the daily moving average purchases of total hogs and 93.7% on the Index hogs.

Best wishes,

Doc