11/21/19 was down -0.64 to 59.44. The ZZZs settled premium to the component by +1.79. On Friday cutouts gained +1.60 and the model calculates the packers' gross margins are $50.56/index hog. Since 10/1/19 cutouts have tacked on +9.34 but the CME Lean Hog Index has only gained +1.61. Packers are prospering and the producer is not sharing that prosperity.

The six-day moving average carcass weight firmed to 215.19#. That is +1.91# yr/yr. Index hogs were steady to firm at 214.33#. Packer hogs are +0.49# heavier than the non-packer hogs. The percentage of packer hogs in the kill mix has now dipped below 39%.

By the time the afternoon reports came out, packers has taken a hatchet-job to their bids and the model projects the afternoon Purchase Index will drop -1.43 and the component on Friday's kill will suffer a decline of -0.45 to -0.65. Fridays are generally a big purchase day for packers usually running about 120% of the moving average daily purchases. By the time the afternoon reports came out, they had purchased 109.1% of the moving average purchases of total hogs and 114.1% on the Index hogs. I am hopeful that the morning reports will will be released in a timely manner to give us a pre-opening feel of how Friday wound up.

The Democrats scored a huge landslide victory in Hong Kong over the weekend giving President Xi another headache to worry about. I don't see this as having much impact on the price of pork in China but it is a factor in the trade war negotiations albeit a rather small one.

Looking at the way the CME Lean Hog Index is falling, I am wondering if there is some risk that the current seasonality low of 54.67 set on 9/24/19 will be penetrated. Last year the seasonality low was set on 9/3/18 at 45.30 and the last seasonality high came on 8/2/19 when the CME Lean Hog Index topped out at 84.69. Hogs have really been on a slippery slope down-hill when they should have been going up because of the ASF epidemic in China. It looks like trade wars have their consequences!

Best wishes,

Doc