MURICO.com Forum

The CME Lean Hog Index component on the kill for -

2/5/2020 WAS DOWN -0.86 TO 60.02. It appears that GGGs will settle discount to the component by -2.30. The drop in cutouts has really hurt packers gross margins. The model calculates they have now falllen to +$10.34 per index hog. Packers won't be very anxious to bid higher until they get their margins back up a little.

The six-day moving average carcass weight firmed tp 216.97#. That is +1.14# yr/yr. It was mostly packer hogs that were heavier. Packer hogs are now heavier than non-packer hogs by +3.86#. Index hogs dipped to 214.12#.

Packers may be moving their hogs out a little faster now. Their percentage of hogs in the kill mix is now running consistently above 40%.

The coronavirus is still raging in China. The number infected is probably greater than 30,000 now and some of those infected may not be showing symptoms. That will be scary if some start to carry the virus but are asymptomatic. Having a bunch of carriers running around would really complicate eradication. This could become a real wild card relative to world demand for port. There are some who worry about China's ability to control the disease. I have heard my mother talk about the flu epidemic in the US in 1919. There was hardly anyone who didn't have a family member or an acquaintance die of the flu back then. It is estimated that world wide during that epidemic 50 million people died. By comparison, there were 140 million babies born in 2015 so that would be the equivalent of one out of every three babies born dying.

Best wishes.

Doc