1/28/15 was down $0.96. The model projects that the CME Lean Hog Index component on the kill for 1-28-15 will drop between -0.55 and -0.85. It looks to me like the GGGs and the component will be in lock-step when the 11:00 report comes out - - - unless of course the GGGs make a significant move. And there is a fairly high probability that will be the case.

I have now concluded that we are in the expansion phase of the hog cycle. I don't know how long it will take before production crests out. I do believe the PED virus problem last year played a role in setting the stage for the expansion phase of the hog cycle to manifest itself.

Of all the production cycles, the hog cycle seems to be the most consistent and has been observed longer than almost any other production cycle. It was first observed by Samuel Brenner in 1876 when he wrote, " For the twenty years past the advance and decline in the value of hogs is as certain as the diurnal revolutions of the earth upon its axis."

I think what he was saying is that just as sure as the sun comes up in the morning the price of hogs will go up and down.

One of the big factors driving the hog cycle is the availability of feed at a price that enable producers to show profitability. We have observed this to have occured the past couple of years when available pasturage drove many cows to market. Now cowboys are in the expansion phase of the cattle cycle. In all probability this will be supportive of hog prices as beef supplies continue to be tight.

Best wishes,

dhm