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The CME Lean Hog Index component on the kill for -

12/10/19 was up +0.05 to 59.48. The ZZZs are trading premium to the component by +0.97. The model calculates that the component will need to gain +0.43 per day to close the "Gap". Looking at the morning reports, it appears the packers have an inventory of more expensive hogs purchased so we may get a bump-up in the index over the next couple of days so I will hold the long ZZZs that are on my boat.

The six-day moving average carcass weight was steady at 216.18#. That is +2.33# yr/yr.. Packer hogs are +1.59# heavier than the non-packer hogs. Index hogs hogs were a bit lighter at 214.46#. Packers' margins are still favorable at $50.36/Index hog.

With the seasonality low apparently in and the next stop being the next seasonality high, I decided to pile another pair of QQQ pigs on my boat. Looking at the summer futures, I see that "The Market" has priced the seasonality high to be something like 86.50 when the NNNs go to cash settlement. I think there is a good chance that the QQQs have been beaten down too low in sympathy with the ZZZ19s and when the low-kill summer months arrive, the previous high of 92.925 for the QQQs will be taken out by the CME Lean Hog Index.

Best wishes,

Doc