1/22/15 was down -$0.54. The model projects that the CME Lean hog index component on the 1/22/15 kill will drop between -0.30 and -0.60. This down trend is still going strong.

The GGGs are now discounted to the component by -3.39. Of course some of that discount will evaporate away when the 201 report comes out shortly. With the cut outs being weak yesterday, the data is hinting that the extra product we are producing with larger numbers of heavier hogs is going to be carried off by consumers at a lower price than where we currently are.

So far this week the kill is running 3.04% higher than the same week last year and the hogs are +2.02# yr/yr. Pork is having to compete with the other white meat and chicken supplies are growing. If the egg set and chick placements are an indicator (and I am sure they are), chicken meat is going to become even more plentiful.

I keep wanting to get long the GGGs because hogs are supposed to rally in the spring as the kill rate gets tighter. The kill rate is not getting tighter nor is the 6-day moving average carcass weight getting lighter. So the data is saying to me, "Don't buy GGGs."

And the historicals are telling me, "Don't sell the GGGs."

So I sit an watch the world go by. If it were not for some spread action, I would be having no fun.

Best wishes,

dhm