12/3/19 was up a measly +0.01 to 58.21. The ZZZs settle d premium to the component by +3.67. That is quite a "Gap" with 8-data days to cash settlement. With cutouts being up +0.30 and the component nearly unchanged, the model calculates that packers' gross margins on index hogs firmed to $48.82 per index hog from $48.02 the day before.

The 6-day moving average carcass weight moved up to 216.00#. That is +1.94# yr/yr. Index hogs were down a little at 214.46#. Packer hogs were+1.21# heavier than the non-packer hogs and they made up 39.2% of the kill. On 11/1/19 packer hogs were lighter than the non-packer hogs by -0.68# and they made up 40.9% of the kill mix.

And I ask myself, "Why?

Still wondering - - -

"Why are packers holding back their hogs to heavier weights and concentrating on killing purchased hogs?"

The last H&P Report had the category of hogs in the 120 to 179# category at +5.32%. Those hogs are mostly killed now and we should be in the 50 to 119# category. They are estimated at +2.42%. The kill so far this week is +3.99%. It is possible that we are now seeing the number of hogs available for slaughter cooling off just a bit. On Monday and Tuesday producers may have been trying to move out a few hogs backed up by the Thanksgiving day holiday and packers may have taken advantage of the situation and cut their bids sharply. The afternoon reports today pointed to a significantly higher Purchase Index for Wednesday.

I wonder, "Is it possible that almost over-night the supply of hogs could drop so fast that it sends packers scrambling to buy hogs?"

I just don't know.

There are plenty of numbers to work with - the challenge is to figure out what they mean and then how to trade them. Because of the ASF problem in China, I am still long some summer futures. They are plenty painful! I am also long a couple of ZZZs and of course my boat is laden down with all sorts of calendar spreads. I am hoping the calendar spreads and a few scalps from time to time will enable me to survive until exports to China cause the summer futures to make a significant move up. The data the past couple of days may be suggesting that the seasonality low of 54.67 posted on 9/24/19 is going to hold.

From my perspective that would be very good news because I am ready to see the price of hogs start their long, steady move to the seasonality high that often coincides with the Independence Day Holiday and the mild surge in demand associated with it.

Best wishes,

Doc