1/8/2020 was down -0.20 and the model projects the component on yesterday's kill will drop between -0.05 and -0.35. Yesterday the component was up +0.39 putting the component at 59.54. The strength of the component coupled with the drop of -0.75 by the cutouts dropped packers gross profit margin to $28.38/Index hog. The GGGs settled premium to the component by +9.84.

Yesterday packers purchased 81.5% of the moving average daily purchases of total hogs and 94.2% on the index hogs. Packer hogs are +3.11# heavier than the non-packer hogs. I view this as a bit bullish for packers to be holding their hogs back seemingly looking for higher prices. We are in the chase looking for the next seasonality high. It has a tendency to show up around the 4th of July.

My profit objective was met on the long GGG and JJJ scalper I bought earlier now I will go short a GGG pig if we get a rally. The "Gap" looks so wide that the GGGs may have to give up a point or two by the time we get to cash settlement.

Best wishes,

Doc