MURICO.com Forum

The final Purchase Index for - - -

2/4/15 was down -$0.99 and the model projects that the CME Lean Hog Index component on the 2-4-15 kill will continue down the slippery slope by something in the range of -0.60 to -0.90. The down trend is continuing. It appears to me that it is driven by the fact that we are in the expansion phase of the "Hog Cycle" with more hogs coming to market than projected from the last H&P report. So far this week the kill is running +1.62% yr/yr.

That's more than 1.0% higher than projected from the last H&P report and it comes on top of very sstrong numbers for the past two weeks.

Not only are we getting more hogs but they continue to come to market heavy. Yesterday the 6-day moving average carcass weight was +2.67# yr/yr.

It appears that retailers are having a little trouble moving all this pork. Yesterday the primal cuts were down -1.57. They have dropped more than twelve points since 1/21/15.

This is the time of the year when the kill usually softens and price firms a little. Obviously the "Hog Cycle" can trump the seasonality trade.

I still have some short GGGs, JJJs, KKKs, & NNNs piled on top of some spreads.

Best wishes,

dhm