3/25/25 was down -0.60 to 60.51. The JJJs are now premium to the component by +0.64. I'm not sure the bottom is now in for the falling index.

So-

I took profits on one of my long J/M spreads and have an order working to ring the till on the other one. The market dished me out a dose of humble pie on the K/M spreads. I had sufficient margin to ride out the storm without taking losses but my margin took a severe kick-in-the-pants. I continue to think that the spread priced at -7.20 is too much premium on the MMMs. On average over the past eleven years it has gone to cash settlement at -0.65. I don't think for a minute that this is an "Average Year" but the -9.00 discount the KKKs suffered to the MMMs on 3/24/15 is not average either. I was inclined to buy more but controlled the urge and just bit the bullet and held on.

The 6-day moving average carcass weight firmed to 214.33#. The is -0.31# below the same date last year. Packer hogs were heavier and non-packer hogs were essentially unchanged. Producers are current in their shipments but they are NOT short of hogs. Getting current may have mushroomed the kill up a bit since 2/26/15. Now that they are current, the kill is coming in 1.5% stronger this week than the +3.5% projected from the last H&P report.

Last week the kill was +6.3% higher than projected from the last H&P report. Based on this, there is a good chance that the H&P report tomorrow will show that the 180# and up class of hogs will be up something like 2.0% to 4.0% more than the 3.5% number we have been working with from the last H&P report.

The average estimate of hog pundits is that the inventory of market hogs will be up 7.2% over one-year ago with a range of +5.0% to 9.0%. That is in line with my numbers.

If the entire spectrum of market hogs is up 9.0%, in view of the declining cutouts and high freezer poundage, it won't be a bullish H&P report.

Looking at the firmness of the front month futures, traders don't seem to believe we are going to see a 9.0% increase in market hogs. I don't believe they even believe we are going to get the 7.0% "Average" estimated increase but we might.

Best wishes,

dhm