1/13/15 was, as expected, down. This time by -$0.33. The model projects that the 1/13/15 CME lean hog index component will drop between -0.25 and -0.55. The down trend continues.

When the primal cuts report came out with a little strength yesterday, traders became a little bullish and nudged the GGGs up a little. They now seem to be re-thinking that decision and the premium against the close that carried through the night is partially going away.

I want to get long hogs because they almost always go up in the spring and so I have my eyes focused on finding some bullish signals. The only bullish signal I am getting is the historical fact that hogs usually advance from now until the NNNs go to cash settlement and the fact that the primal cuts were up yesterday.

Otherwise I am seeing:

1. The kill rate is coming in higher than suggested from the last H&P report opening the door to the possibility that producers have expanded more than reported by the USDA in the last H&P report.

2. The six-day moving average carcass weight is still running higher than one-year ago. Heavier carcasses and more of them translates into more pork.

3. Cheek'en people are putting more eggs to set and chicks to placements than one year ago; furthermore they are killing their birds at heavier weights. That means more competition for pork.

4. The economy continues to be weak and consumers' incomes are still under stress so their pork appetites may have to be ratcheted back or at least not expanded very much.

5. The global economy is in only fair shape. This could hamper export sales a little and we need exports to carry-off all the pork that is being produced.

I spent the night nurturing two short GGGs. I have order to dump them is they dip a little below yesterday's settle. Maybe I should have taken the settle which the market gave me a few minutes ago.

Best wishes,

dhm