1/15/15 was down -$0.13 and the model projects that the CME Index component on the 1-15-15 kill will eased by something in the range of -0.15 to -0.45.

Packers did not make a very good purchase yesterday at only 83.4% of the moving average daily purchases. It is not clear whether packers didn't want the hogs or whether producers were reluctant sellers with a mildly softer bid. I'm suspecting packers were not wanting a lot of hogs because of the holiday Monday.

The softness of the GGGs this morning has them discounted to the Index component by 1.36. Not unreasonable since the index is still in a down trend. Also the kill so far this week is +2.75% yr/yr. That is more than projected from the last H&P report. With carcass weights still running over last year by 2.44#, I'm thinking producers may have expanded more than the USDA projected or else they may have controlled the PED virus problem more quickly than the market thought.

At any rate, hog numbers seem to be ample.

It appears to me that packers margins are fairly good even though primal cuts has moved down by nearly 10.00 since 12/15/14. By cutting their bids, packers have actually improved their margins.

I was able to skim of a few tics on the Feb Cattle/Hog spread before it tumbled yesterday. I think I should have bought this morning but it is so wild that it has me side-lined.

I was able to take profits on a couple of K/M spreads this morning but have plenty more to peddle.

Best wishes,

dhm