1/21/15 was down again but this time it was only -$0.09. Packers still have a fair sized inventory of cheaper hogs purchased and when this is taken into consideration, the model projects that the CME Index component on the 1/21/15 kill will ease by something in the range of -0.10 to -0.40.

The slowing in the rate of decline of the Purchase Index may be indicating that we are nearing a bottom.

Packers' margins appear to be widening quite nicely so they may have the financial where-with to begin sweetening their bids. This is the time of the year for that to begin to happen. A lot depends on the kill rate and it is running quite high so far this week and the 6-day moving average carcass weight is still a couple of pounds higher than last year. We may have to work at this level or a bit lower before we are ready to get very bullish.

The K/M spreads continue to work a little for me. Yesterday I was able to replace a couple on which I had taken profits. I have a nice inventory and can buy more or take profits on those which I have. All I need of for them to move a little.

Best wishes,

dhm