The final Purchase Index for - - -

12/12/14 was down -$0.75 and the model projects that the CME Lean Hog Index component on the 12/12/14 kill will drop between -0.45 and -0.75. Packers are getting a fairly large inventory of hogs purchased at progressively lower prices. This may give them enough cheaper hogs cause the component to begin dropping a bit faster.

The 12/12/14 purchase was quite large at 114.7% of the moving average daily purchases. Producers were seemingly rather willing sellers in the face of lower bids by the packers. It is possible that this means producers have quite a few hogs needing to come to market. I know the forth coming holidays upset the killing rhythm so producers may be anxious to reserve hook space.

On average this time of the year there is a mild tendency for the Index firm a little in front of Christmas. If producers have a few extra hogs to run to market, it may not happen this year. In watching the 6-day moving average carcass weight, I get the impression that producers are fairly current in their shipments. We may see a little weakness in the Index but the fundamentals don't seem to be pointing to a collapse, as least not today because the cutouts held up well Friday.

The cattle market was kind to me Friday and I was able to successfully convert most of the short Z/G spreads into short Feb cattle/hog spreads. I only have one naked GGG futures left and will have to deal with it today.

Best wishes,