1-30-15 will be late "Due to packer submission problems. GGRRRrrrr!!!!

From the afternoon reports the model projected that the final Purchase Index would be down around a buck and the component on the 1-30-15 kill would drop between -0.70 to -1.00. We are still in a sharply downward trend.

The kill for last week was +6.15% higher than the same week last year. The data is beginning to hint that the expansion has been quite a bit greater than estimated by the 12/1/14 H&P report. The number of hogs scheduled on Friday was +6.22% greater than the same day last year.

There seems to be little doubt that the we are in the expansion phase of the Hog Cycle. It is doubtful that we are anywhere near the crest of the expansion. The Hog Cycle just doesn't work that way.

There are two factors that cast very big unknowns into the equation:

1. What impact will the shortage of beef have on the price of pork and

2. What impact will the rapid expansion of broiler have on the price of pork?

The GGGs have shed 13.10 since the H&P report came out. I think it is probable that the MMMs will shed a similar amount by the time they go to cash settlement. So far they are down 6.25 so they may have another seven points or so to go. If I were a producer I think I would be a tiny bit more aggressive than usual with my hedges.

At this point I have piled on top of my spreads some short GGGs, JJJs, KKKs, MMMs and NNNs.

Best wishes,

dhm

P.S.: I'm generally a very good fade when I develop a directional bias!