11/12/19 was up +1.21 and the model projects the component on yesterday's kill will be up between +0.10 and +0.40. The inventory of less expensive hogs that packers have purchased will probably keep the component depressed until the more expensive hogs reach the packing plants. The ZZZs are trading premium to the component by +5.16.

With their higher bids packers were able to purchase 119.6% of the moving average daily purchases of total hogs and 99.7% on the index hogs. Those are quite high numbers for a Tuesday, but then a jump of +1.21 in the Purchase Index is quite a jump. Obviously packers were wanting hogs.

Looking at the way cutouts are climbing, it is not surprising that packers are wanting hogs. The model calculates that packers' gross margins are $64.15/Index hog. Packers are probably feathering their nests with margins like that. So far they have been a bit reluctant to share much of it with the producers of negotiated hogs. The formula hog producers are doing a bit better.

Best wishes,

Doc