2/20/2020 was up +0.34 and the model projects the component on yesterday's kill will change in the range of -0.05 to +0.25. Yesterday was the second day in a row when the Purchase Index has been up. If packers bid higher again today, it will suggest to me that the long, downward trend to the index has ended and we will now begin to see the index generally trend upward until we get to the seasonality high. "The Market" is saying the seasonality high will be around 82.50 and it will arrive about the time the NNNs go to cash settlement.

That would be a gain in the Index of 26.56.

On average over the past eight years the index has gained 22.54 between mid-February and the seasonality high so "The Market" is expecting a stronger than average gain in the Index this year.

In view of the world shortage of pork, created by the ASF virus in China, that bullish bias seems to be totally justified. Last year the index was driven up 29.64 by the time we got to the seasonality high.

Even though we will probably see the index march a good bit higher, it will not be straight up but there will be significant dips and rallies along the way. Today I am expecting a dip. That often happens on Fridays as traders square up for the weekend.

With their higher bids packers purchased 81.5% of the daily moving average purchases of total hogs and 89.0% on the index hogs. Those numbers are a little weak.

Packers gross margins have rallied to $18.11 per index hog. Not great but plenty adequate for them to keep the lights on.

Best wishes,

Doc