11/22/19 was down -1.93 to 57.51. The ZZZs settled premium to the component by +3.57. Cutouts gained +0.94 today and the model calculates that packers' gross margins were $57.09/Index hog. Packers are doing really well!

The six-day moving average carcass weight firmed to 215.48#. That is +1.82# yr/yr. Index hogs were also a little heavier at 214.25#. Packer hogs were heavier than the non-packer hogs by +0.60#. The percentage of packer hogs in the kill mix drifted down to 38.7%. And I wonder, "Are hog prices about to turn up and packers are saving their hogs for higher prices and concentrating on purchasing hogs while they are cheap?"

The afternoon Purchase Index was up 1.05 and the model projects the component on Monday's kill will be up between +0.20 and +0.50. With their higher bids packers purchased 132.8% of the moving average daily purchases of total hogs and 118.1% on the index hogs. Those are huge numbers for a Monday afternoon report!!!

From the last H&P Report the model projects the number of hogs available for slaughter will decline after Thanksgiving and packers may have been competing with each other on Monday to get hogs lined up for the post-holiday slaughter in the face of declining numbers..

My feeling is that the data today has a mildly bullish tinge to it. If that turns out to be the case, it will lock in the seasonality low at 54.67 set on 9/24/19. The ZZZs are getting to be very short term and the GGGs settled premium to the ZZZs by 6.725. On average over the past eight years the GGGs were premium to the ZZZs by 3.42 when the ZZZs went to cash settlement. During that period, the highest was last year when the GGGs were premium to the ZZZs by 8.70 when the ZZZ went to cash settlement.

I am still long some ZZZs plus summer futures as well as quite a load of calendar spreads. Today I added a couple of long Q/V spreads and took profits on a couple of short V/Z spreads. I have a few more long G/J spreads than I am comfortable with.

BEst wishes,

Doc