10/21/19 was up +0.37 to 65.71. The sell-off in the ZZZs yesterday dropped them below the component by -0.21 thus closing the "Gap". That means we are going to flounder around for the next month and a half trying to figure out where the ZZZs are going to end up at cash settlement. The last H&P report suggests that the kill rate will begin to moderate about Thanksgiving time and continue to weaken a little until after the first of the year. A trade deal with China could open up exports enough to move the CME Lean Hog Index somewhat higher. It continues to appear the seasonality low for this year was posted at 54.67 on 9/24/19 so we are looking for the next seasonality high. Generally it will occur about the first of July. This means the Index might be wondering around for quite a while before it finally tops out.

A week or so ago I read where pork prices are up 69% in China. If we get a 69% bump from our seasonality low of 54.67 our summer futures will be at something like 92.50 which is where we are now. On the other hand if we get a bump-up of 69% from where the CME Lean Hog Index is now, the summer futures could go to the 110 range. The last Hog Cycle crest was 134.17 posted on 7/16/14 . It appears that pork prices in China are nearly three times higher than in the USA. There could be some up-side potential here.

The 6-day moving average carcass weight eased to 212.72#. Packers shipped a bunch of lighter-weight hogs. Index hogs were a bit heavier at 212.75#.

The afternoon Purchase Index was down -0.22. The model projects the component on yesterday's kill will change in the range of +0.15 to -0.15. By the time the afternoon reports were released, packers had purchased 88.2% of the average daily purchases of total hogs and 95.9% on the Index hogs. It appears that producers are staying quite current in their shipments. This is not the time of the year to get behind in shipping hogs.

It has been a while since I have flipped as many calendar spreads as I did yesterday. It was the J/K that moved especially well for me and I wonder, "Why?" It was not the Goldman roll season.

Oh! Well! I will just take it and be grateful.

Best wishes,

Doc