1/9/2020 was down -0.45 to 59.13. The GGGs settled premium to the component by +8.12. The model calculates that it will take an average daily gain by the component of +0.34 to close that "Gap". I feel lucky to have made my profit targets on both a long GGG pig and a long JJJ pig from last week. I have been wanting to get short the GGGs and it looks like a missed a good chance today.

Cutouts got thumped again today dropping -0.33. The model calculates that packers' gross margins are now 29.07 per index hog. That is down quite a bit from where we were a couple of weeks ago.

The kill this week came in very strong at +6.23% over the same week last year. Not only that but the carcass weights on the index hogs firmed to 215.87#. Packer hogs are now running +3.06# heavier than non-packer hogs. If that means packers are choosing to buy hogs and hold their back a bit, that strikes me as being a little bullish longer term unless the USDA missed on their 12/1/19 hog count. If the high kill rate this week is a preview of things to come, it is going to take a lot of exports to move out all that pork. On the other hand, it it represents some catch-up on the slow holiday kill, then we will see the kill taper off and the price of hogs will resume their move upward looking for the seasonality high. It may be a long search because it usually hits a little before the NNNs go to cash settlement.

Best wishes,

Doc