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The CME component on the kill for - - -

12/30/14 was weaker than the model projected coming in down -0.48 putting the component at 78.04. With the jump the GGGs have made today, the "Gap" has opened to 3.81. If the kill drops as it often does this time of the year, the index will have no trouble moving higher to close that "Gap" and could possibly push the GGGs up a little. Packers margins appear to be wide enough to pay their utility bills so pork-packers are not under nearly as much pressure as beef-packers.

The six-day moving average carcass weight moved up to 216.12# putting it just +1.91# yr/yr. I had been expecting the carcass weight to move up a little because of the non-kill day last week because of Christmas. And sure enough, the heavier weight showed up today. It may take packers a week or so to climb on-top of the back-log or hogs and get the carcass weights back down.

Last year the weights moved up and it took packers nearly three-weeks to get them back down. This year packers are peddling the primal cuts for 3.10 more than they were last year and their national average cost of carcasses is 1.29 less so it appears to me that packers are in a much better position to keep their bids firm this year than they were last year. They may actually have a little incentive to bring hogs in at a fairly brisk clip.

I'm not very bullish the GGGs but I did give up seeing them dip to 79.80 to give me an entry point and have now picked up three long GGGs that I plan to carry over the weekend.

Best wishes,

dhm

Messages In This Thread

The CME component on the kill for - - -
Re: I don't know about 79.80 DH,
The Feb cattle/hog spread really is psychotic, -