11/27/19 was down -0.16 to 58.59. The ZZZs settled premium to the component by +2.09. Packers had a little trouble selling all the pork they are producing and the primal cuts tumbled by -2.28 causing packers' gross margins on Index hogs to fall to $45.53/Index hog. From the afternoon reports the model projects the Purchase Index will be up +0.61 and the component on yesterday's kill will be up between +0.10 and +0.40.

I am not very confident that is the way things will play out when the final reports comes out tomorrow morning because the number of hogs purchased by the time the afternoon reports were posted was very low at 71.80% of the moving average daily purchases of total hogs and 75.83% on the index hogs. With most plants being dark today and the Thanksgiving day demand surge behind us, there is little incentive for packers to want to produce more pork.

The six-day moving average carcass weight firmed to 215.27#. That is 1.91# yr/yr. Index hogs were unchanged at 213.80#. Packer hogs were +0.97# heavier than non-packer hogs and the percentage of packer hogs in the kill mix declined to 38.8%. On 11/1/19 packer hogs were -0.68# under the non-packer hogs and the percentage of hogs in the kill mix was 40.9% and I ask myself, "Why have packers seemingly emphasized killing non-packer hogs and held their hogs back?"

Is it possible that packers think pork prices are bottoming out and they want to market their hogs when pork prices have rebounded?

I just don't know but the last H&P Report pegs the category of hogs that will be coming to market starting now at +2.42% versus the +5.32% for the category that is just being finished out. I suppose a drop of 3% in the kill rate coming just in front of the holiday demand surge might be noticed but the huge stock of bellies in cold storage will have to be reckoned with at some point.

I piled another long G/J calendar spread on my boat yesterday at -6.70 and I am wondering if I am getting too many. On average over the past nine years it has been at -2.19 when the GGGs have gone to cash settlement. The highest cash settlement was +4.54 set in 2017 and the lowest was -9.61 posted in 2014. The lowest it has been on this date in the past nine years was -6.13 set in 2017 so it is lower than it has been for nine-years. In 2012 it was way up at -1.72 on this date. This is a bull spread and could benefit from an increase in demand relative to supply over the next couple of months. Conversely, if supply over-whelms demand, it may drop further.

In closing I want to thank you for being a patron of my web site - not that it puts a lot of money in my wallet but it does give me something to do and I keep thinking it helps my trading.

Have a Happy Thanksgiving Day and eat plenty of HAM! Hog producers need all the help they can get!!

Best wishes,

Doc