2/12/15 was down -$1.00 and the model projects that the CME Lean Hog Index component on the 2/12/15 kill will drop between -0.80 and -1.10. The Hog Pricing Model projects that the cash settlement index for the GGGs will be 62.03 with a range of 61.53 to 62.53. When we get the component for yesterday, we will have 50% of the cash settlement index. The GGGs settled at a discount of -1.53 to the component. Traders may have driven the GGGs a bit too low so I am going to cash settlement long the GGGs and have orders to buy more on a dip.

The pop-up in the MMMs caught me napping at the helm. I would have sold more but I was focused on the GGGs and the June cattle/hog spread which I sold at 67.10. I quickly realized the folly of my ways and covered it with enough profits to pay the rent for today. I'm going to wait for 70.00 to try that trick again.

There is a good chance that the MMMs will rally this afternoon when traders begin squaring up for the long weekend. That's when I will sell again.

My view of the data being released by the USDA day-after-day is that we are in the expansion phase of the "Hog Cycle". The data seems to suggest that there is somewhat more expansion that indicated by the last H&P report:

- The kill so far this week +8.48%.

- Scheduled hogs +6.45% yr/yr.

- Cut outs down -12.38 since 1/26/15.

- Carcass weights +2.18# yr/yr.\

I can't find a shred of bullishness in the data except that beef prices are sky-high but chicken is not and pork competes more with chicken than beef, me thinks.

The Q/V spreads have been giving me a little grief but I think "Buy" is the right side of that trade. On average at some point it almost always seems destined to hit 11.00 and usually expires at 10.00 or higher. I have been scaling into the trade and scaled in too fast and felt a need to put a hold on my buys when I should have been buying more aggressively!

Best wishes,

dhm