MURICO.com Forum

The CME Lean Hog Index component on the kill for -

12/5/19 was UP +0.04 to 58.51. The ZZZs settled premium to the component by +2.62 on Friday, Cutouts were up +0.72 and the model calculates that packers margins were at $50.44 per Index hog. The afternoon Purchase Index dipped by -0.63 and the model projects the component on Friday's kill will drop between -0.20 and -0.50. The kill last week was +9.0% higher than the same week last year. That was a big surprise, I was expecting it to be something like +4.0%. With a kill rate like that, we are going to need a monster holiday demand to surface to carry off all the pork packers are producing.

Not only is the kill rate high but the 6-day moving average carcass weight moved up to 216.39#. That is +2.15# yr/yr. Index hogs were also a bit heavier at 214.81#. Packer hogs were 1.10# heavier than the non-packer hogs and packer hogs made up 39.6% of the kill mix. That is down from 40.9% on 11/1/19.

If the component for Friday comes in at -0.40, the model calculates that it will take an average daily gain of +0.67 per day in the component to close the "Gap". The component has gained an average of +0.38 over the past four days but the model projects it will lose between -0.20 and -0.50 on Friday. That would break the four-day up trend we now have going. This does not give me a lot of confidence that the index will gain enough to close the "Gap" and the component will definitely NOT move up enough to get me out of "troubled waters" on a couple of long ZZZs I have parked on my boat.

Best wishes,

Doc