11/27/19 was down -0.48 to 58.11. (It looks like I made a typo on the date in my last CME Lean Hog Index component change) . The ZZZs settled premium to the component by +3.92 on Friday. cut puts moved up 1.87 to 81.95/cwt. I was reading on the internet where pork in China a couple of weeks ago was 53.80 yuans/kilo. I believe that translates into about $345.85/cwt or 4.22 times as high as pork in the USA. This trade war is stripping hog producers of a lot of profit opportunity. Well, for that matter it has deprived Dewey and me some of the gains that appeared at one point to be a lead-pipe-cinch.

The six-day moving average carcass weight moved up to 215.68#. That is +1.64# yr/yr. Index hogs were a bit firm at 214.04#. Packer hogs made up 38.91% of the kill mix. That is -2.01% less than on 10/31/19.

I keep wondering, "Why are packers holding their hogs back to heavier weights and killing more non-packer hogs?"

The model calculates that packers' gross margins are $50.73/index hog.

Nearly all production moves in Cycles. I notice the car manufactures are really working to move the excess cars they have produced.

No production cycle has shown greater dependability and consistency than the Hog Cycle. Actually there are two hog production cycles - the seasonality cycle and the longer term Hog Cycle. At this point in time my eyes are focused on the CME Lean Hog Index low of 54.67 posted on 9-24-19. It is holding as the seasonality low for this year. With "The Market" having the ZZZs priced premium to the component by +3.92, traders are telling me that they are strongly of the opinion that the seasonality low is now set and we are looking for the next seasonality high as well as the next Hog Cycle High.

Some estimates are that China has lost 40% of their hog herd. When they start rebuilding, there will be a peck of gilts held back for breeding sows that other wise might have gone to slaughter. This will further reduce their pork production.

But -

I keep reminding myself that China does not have a free market system. If their government feels threatened by civil unrest due to high food prices, they could implement price control measures to control inflation. I keep remembering the steps taken by the USA during World War II to control inflation. I suppose China could do something like that now if prices get out of hand..

At the same time we have a lot a pork we could share with then if they will just agree to trade with us fairly!

Best wishes,

Doc