out of the picture will undoubtedly slow the growth rate of hogs and could very well be a factor in lighter carcass weights.

The kill rate is coming in very high relative to the last H&P Report. So far this week we are +11.05%. Either there are more hogs than the USDA reported or else hogs are being pulled forward or a combination of both. The drop in carcass weights is consistent with hogs being pulled forward.

The component on yesterday's kill was down -0.94 to 56.85. The GGGs are now trading discount to the component by -0.95 with three-days of date to get us to cash settlement. Considering the strong down trend the market is in, I am going to leave those short GGGs on my boat and go two cash settlement with them. They, along with some calendar spreads, are the only things that worked for me this year.

The 6-day moving average carcass weight was steady this morning at 216.06#. That is +0.94# yr/yr. Index hogs were a bit lighter at 213.80#. Packer hogs are now +3.95# heavier than the non-packer hogs. The data seems to be saying that packers are now shipping a few more of their hogs and they are heavy! The model calculates that packers' gross margins have now fallen to $13.05/Index hog. Cutouts are just too low to cause the packers to get very excited about bidding higher for hogs.

There is still a strong seasonality factor in hogs. Farrowings are always lower in the winter and piglet losses are higher giving us a lower kill rate in the summer and higher prices. "The Market" is now saying we will get the seasonality high about the time the NNNs go to cash settlement and it will be in the 82.50 range. Considering the global supply of pork, I think the seasonality high will break through 90.00 and the next "Hog Cycle" high could be even higher if China can control their coronavirus problem.

Best wishes,

D.H.