5/6/16 was up +$0.59 and the model projects that the CME Lean Hog Index component on the 5/6/16 kill will jump between +0.50 and +0.80. The kill last week came in at a very strong 2.211 Million head. That is a 4.88% increase over last year. That is a lot more hogs than i was expecting based on the H&P report.

With their higher bids packers made a sollid purchase at 104.9% of the moving average daily purchases but they didn't move the product very well. Cutouts took a $1.47/cwt haircut and it was mostly bellies that caved in.

I worry that the weak cutouts is a leading indicator that the Memorial Day demand surge has nearly been met and packers' appetite for hogs may slack off a bit. The firm six-day moving average carcass weights suggest that the supply of hogs may not slack off. With the MMMs trading premium to the component by 6.77, well, there may be room for the MMMs to cough up a couple of points.

The KKKs are premium to the component by a more modest +2.25 and a fair amount of that may come off when we get the 201 report this morning. It doesn't seem to me that the KKKs are as at as great of risk of a price-drop as the MMMs. But maybe I'm looking at it with rose-colored glasses because I am long the KKKs and short the MMMs.

Best wishes for a great trading day,

dhm