Sort & Cull

Although Henny Youngman has been dead for more than 15 years, remembering the "King of the One-Liners" still makes me laugh. What his jokes lacked in sophistication and cerebral humor, they made up for in sheer volume.

Henny delivered his stand-up routine like an over-caffeinated auctioneer. Before you had a chance to mull over whether a line was all that funny, the guy would hit you with two or three more.

His rapid-fire routine would go from "The horse I bet on was so slow, the jockey kept a diary of the trip" to "I've got all the money I'll ever need, if I die by four o'clock" to "If at first you don't succeed, so much for skydiving," in less than a minute.

Most of Henny's story may have been groaners, but if his relentless style rained long enough, it was nearly impossible to keep a straight face.

There was something about this week's reconfiguring of lean hog futures that made me think about one of his most classic observations: "A doctor gave a man six months to live. The man couldn't pay his bill, so he gave him another six months."

Like this extremely distressed man, the June lean contract was given tough news several months ago (i.e., the potential impact of pig death loss linked to PED). The dire proclamation caused the early summer issue to race as much as $16 ahead of the cash index.

And just as it gradually became clear that the doctor had to more perfectly align his diagnosis with accounts receivable, CME traders eventually recognized that more time was needed to capture the full bullish payoff from PED.

Accordingly, the board over the last month or so has been all about stripping the premium status from June and strangely reassigning it to July and August. I guess it's the trade's way of saying that PED destruction has not been avoided, just delayed.

In a way, it makes sense to keep pushing this bullish potential to the back burners of the third quarter. If the winter pig crop did in fact suffer the most from PED death loss, the biggest hole in pork production should have been dialed into the July-September period to begin with.

Yet here's the problem.

Deferring bullish dreams (i.e., dramatic cuts in pork production driving hog and product prices sharply higher) from June to July to August is one thing. But once we move past midsummer (and it will be here before you know it), it will be increasingly difficult for the market to imagine a truly explosive combination of supply and demand.

Good news can be delayed for only so long before cheerleaders start to sound hoarse and insincere. While there's still plenty of time for bear spreaders to feel confident and actual pork production to drop like a rock, the market is clearly painting itself toward a decisive corner.

There's not a doctor in the house funny enough to give his wheezing patient extended credit past Labor Day.

--

John A. Harrington

(AG)