12/9/19 kill was up, UP and AWAY at +1.54 go 59.43. It looks like the ZZZs will settle premium to the component by +1.07. The model calculates that the component will need to gain an average of +0.31/day to close the "Gap". If the jump in the component today is a preview of things to come, that will surely happen. Needless to say I was pleasantly surprised by the gain in the component since I had some long ZZZs piled on my boat.

The six-day movin average carcass weight eased to 216.26#. That is +2.36# yr/yr. Index hogs were steady at 214.91#. Packer hogs are +1.37# heavier than the non-packer hogs. Packers are still finishing their hogs to heavier weights and opting to kill more purchased hogs. That suggests to me that packers think the price of hogs is going up.

After the monster kill last week, the kill this week is currently running at +3.68% over the same period last year. The last H&P Report suggests it will be falling to +2.42%. If the kill rate declines that much and demand remains fairly constant, the substantial gain we saw in the component today on yesterday's kill may be a preview of things to come.

Packers gross margins were at +$52.08 per index hog according to the model's calculation. That means packers can bid a bit higher for hogs and still have enough money left over to keep the lights on.

Most likely the jump in the component today seals the deal that the seasonality low is now in place and we are off to the races looking for the seasonality high.

Oh!

And by the way, the next Hog Cycle high is on the docket since the last Hog Cycle trough was posted on 9/3/18 at 45.30. The last Hog Cycle high was hit on 7/16/14 at 134.17. That tells us how high hog prices can go when supplies are short and consumers are wanting bacon to go with their eggs. Rumor has it that China has lost quite a number of hogs from the ASF virus but actual numbers are difficult to come by.

Best wishes,

Doc