3/20/15 was down -$0.63 and my model projects that the CME Lean Hog Index component on the 3/20/15 kill will drop between -0.50 and -0.80. Day-after-day-after-day we just seem to get a drop of something around -0.50 in the component. Packers may a solid purchase of hogs Friday at 116/4% of the moving average daily purchases and they did this with somewhat lower bids.

Producers seem to be motivated sellers of hogs. They are getting very current in their shipments; the 6-day moving average carcass weight is now below where it was one year ago by about -0.25#.

We we know why the index keeps dropping day-after-day -

a) The hog kill and pork production is up something like 6% to 7%.

b) Exports have been hampered by the west coast dock strike.

c) Chicken production is on a swing higher and

d) The strong dollar makes it more difficult for countries to buy our pork.

It appears that we are still in the expansion phase of the hog cycle so production will likely remain firm for some time.

The dock workers have gone back to work but they are far behind.

The egg set and chick placement continue to be firm.

There is little to suggest the the strong dollar will now weaken.

These things don't seem to suggest that a bull is just around the corner. I have no idea how high pork production will go during this expansion phase of the hog cycle. The data continues to point to a few more hogs than projected from the last H&P report. Friday we may get a better idea of where we are headed.

I have unbalanced my spread trades with more shorts than longs but the long K/M spreads that I do have are trashing the profits from the extra shorts futures. Sometimes there is enough demand in front of the Memorial Day weekend to bump the index up a tad. There are some very large traders in the hog market so I will hang on to see if they will go on a KKK buying binge.

Best wishes,

dhm