7/18/16 was down a whooping -1.13 to 78.53. Packers found a bunch of cheap hogs yesterday to the surprise of my model. When packer get the upper hand, they know how to cut prices. And it isn't that their margins are hurting, at least the firm cutouts would suggest that. The QQQs are now discount to the index component by -0.91 suggesting traders are thinking lower still.

The six-day moving average carcass weight eased to 209.53# this morning. Both packer and non-packer hogs were down about a quarter pound. Index hogs continue to be ligher at 208.14#. Undoubtedly hot weather is slowing growth of hogs. Packers are running their hogs to market at a fairly rapid clip. They are only +0.61# heavier than the non-packer hogs. Back in April they were nearly four pounds heavier.

Unless the BLT season comes to the rescue, there is a good chance that the index will drift a little lower, especially if the inventory of market hogs was correct in the last H&P report but they were not quite as heavy as the report suggested. In that case there may be strong numbers coming to market especially when the weather cools and fresh corn starts to flow. This could set the stage for some compensatory growth that will move hogs to market at a rapid clip.

I'm going to be interested to see if there is some follow through to the strong kill we saw yesterday. The number of hogs packers purchased yesterday on lower bids suggests that is a possibility.

Spreads are not trading much for me today. Maybe tomorrow.

Best wishes,

dhm