12/23/19 and 12/24/19 was up +0.75 to 59.54. The GGGs settled premium to the component by +11.35. The model calculates that packers' gross margins on index hogs has now fallen to $34.39/hog being pushed lower by cutouts dropping -1.05 together with the bump-up in the component. The extra category of "Negotiated Formula" hogs disappeared yesterday so I will not be reformatting my model to add them in. There were not enough of them to significantly impact the component anyway.

The 6-day moving average carcass weight eased to 215.05. That is +1.47# yr/yr. Index hogs were a little lighter at 212.34#. Packer hogs are heavier than the non-packer hogs by +1.86#. The fact that packer hogs are heavier makes me think that packers are holding their hogs back expecting higher prices. This may not be the case but that is what I choose to believe.

The final Purchase index for yesterday was down -2.44 and the model projects the component on yesterday's kill will drop between -0.90 to -1.20. If hogs are going to rally before the GGGs go to cash settlement, it does not appear that it will be before the year ends. I still don't want to be long the GGGs as out-rights. .

Best wishes,

Doc