2/11/15 was down -$0.70. The model projects that the component on the 2/11/15 kill will drop between -0.65 and -0.95. The GGGs are now discounted to the CME Lean Hog Index component by 3.12. The model projects that the cash settlement index for the GGGs will be 61.94 with a range 61.44 to 62.44. Yesterday I got long some GGGs took some profits and held some. The data today tells me that i should have held them all but it is impossible to know what the markets are going to do so I am content to just be holding a couple.

If we dip today, I will buy more.

You are right, Dewey, this market is going to bounce. The question is when and how high.

ITZ says that some of the shorts are the producers and they have staying power since they are long the actuals.

It appears to me that the way the "Hog Cycle" works is that once production over-powers demand, there will be a long price down trend until producers become discouraged from low profits and begin the liquidation phase. At this point we are still in the expansion phase. Sows have been bred, piglets farrowed and more gilts are in the breeding pens. This increase in production cannot be turned off like closing an assembly line in a factory.

More hogs are on the way and they will continue to come until producers profits are pinched and some are forced to capitulate and liquidate sows. We are no where near that point yet.

I am trying to sell more JJJs and MMMs this morning on the bounce. So far my price is a bit too high but I don't HAVE to sell. I have a nice inventory of shorts that will treat me well as we continue down this slippery slope. I am now sitting on enough market money to give me some staying power when the bounce comes.

Best wishes,

dhm