1/23/2020 was up +0.45 ti 61.79. The GGGs settled Friday premium to the component by +5.54. The model calculates the packers'gross margins are $37.09/index hog.

The model calculates the component will need to gain an average of +0.41 per day to close that "Gap". Over the last six-years from this date until the GGGs go to cash settlement the Index has gained an average of +0.84. In 2017 it gained 7.55 and in 2015 it lost -11.80. It is going to be interesting to see what happens this year. Because cutouts are trending lower and the kill rate and carcass weights are high, I am still short the GGGs.

The six-day moving average carcass weight firmed to 216.82#. That is +1.56# yr/yr.. Index hogs were also heavier at 214.19#. Packer hogs are heavier than the non-packer hogs by +3.24#.

The afternoon Purchase Index was up +0.16 and it is projected the component on Friday's kill will be up between +0.15 and +0.45. By the time the afternoon reports were released packers had purchased 93.7% of the moving average daily purchases of total hogs and 109.3% on the index hogs. Usually Friday purchases are in the 120% range so there is a strong probability that packers purchased a lot more hogs Friday afternoon and they will show up on the this morning's reports a little later today. I am suspecting packers will end up bidding a bit higher to get the hogs purchased they wanted.

BEst wishes,

Doc