10/29/19 was down -0.57 and the model projects the component on yesterday's kill will drop between -0.20 and -0.50. The ZZZs settled premium to the component by +0.82.
With their lower bids, packers purchased 88.6% of the moving average daily purchases of total hogs and 98.1% on the index hogs. I believe hogs are finishing quite rapidly and packers are producing a bunch of pork. Yesterday it sold quite will with cutouts moving up a bit. Pre-opening says the ZZZs are opening weak. It is going to take strong exports to move all the pork packers are producing. That could begin to happen before the ZZZs go to cash settlement; in the mean time a lot of damage could be done to my margin by long ZZZs.
Packers' gross margins on the index hogs are not too bad so they may not cut their bids too aggressively. Who knows??
"IN THE HOG MARKET YOU CAN ALWAYS EXPECT THE UNEXPECTED" Long Bear