The final Purchase Index for - - -

12-2-14 was down -$0.24 and the model projects that the change in the CME Lean Hog Index component on the 12/2/14 kill will be in the range of down -0.10 to up +0.20. Packers have an inventory of hogs purchased at prices that are scattered all over the place and I'm trying to guess which batch they ran through yesterday. Usually the model does fairly good job with its projection. We'll see how it does today.

At this point in time it appears that packers can't make up their mind whether to bid higher or lower. One day they will be up a little and then down a little. The number of hogs they purchased yesterday was quite low at 73.5% of the moving average daily purchases. There has not been a number that low posted for a while. On Friday it was a huge number at 174.9% of the moving average daily purchases.

These are the total purchases.

The purchases of Index hogs is not fluctuating quite as much.

The weakness in the price of cutouts yesterday is carrying over as weakness in the ZZZs. I have been thinking that there is a good chance that the "Gap" between the ZZZs and the CME index would close with the index moving up but my conviction has not been strong enough for me to take an outright long ZZZ position. Rather I have focused on the fact that the ZZZs are premium to the GGGs and been selling the Z/G spread. Seldom do the ZZZs go to cash settlement premium to the GGGs. Seiling these spreads has treated me well.

I can plainly see now that I covered too many of the short Feb Cattle/Hog spreads. I have hung onto one and it is treating me well today. 20/20 hind-sight does NOT put any money in the bank!

Best wishes,