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W O W ! ! The Hog Pricing Model gave me a - - -

serious head fake this morning.

The CME Lean Hog Index component on the 11-28-14 kill was DOWN 0.23 to 88.37. That's DOWN not "UP" like the model projected!

Based on the projected "UP", I bought 2 ZZZs. I took a bumpy ride down hill on them but held on. It is not looking so bleak now. I am of the opinion that the more expensive hogs that packers bought on Friday are still scheduled and they will eventually come to market and that may firm the Index a bit.

The component is now below the ZZZs by -0.98. It appears to me that there is a good chance that packers will put that much back onto their bids to close that gap in the next nine trading days. On average since the CME Lean Hog Index began trading 18-years ago, the Index has tacked on 1.34 between the end of November and the ZZZs going to cash settlement. If hog numbers are over-stated, that could surely happen again this year.

It appeared out of order for the Feb Cattle/Hog spread to jump more than a point this morning so I sold at 82.20. Have now hustled off to the bank to put a point into my cash account.

Best wishes,

dhm