5/7/15 was UP +$1.16 and the model projects that the CME Lean Hog Index component on the 5/7/15 kill will be up between +1.05 and +1.35. The KKKs dipped 79.85 in front of yesterday's settle and that closed the "Gap" to 3.09. Considering the strong up-trend in the index, that appears too narrow especially with the potential that nearly half of that "Gap" will be erased when we get the 201 report this morning.

The model is projecting that the cash settlement index for the KKKs will be 81.17 with a range of 80.67 to 81.67. With only five more days of data to come in, being long the KKKs seems to be a reasonable businessman's risk, especially when you consider the following"

- The six-day moving average carcass weight has been declining since mid-February and is now -3.77# below the same date last year. This may indicate that producers have liquidated 300K to 400K of market hogs.

- The swine scheduled for delivery report shows that packers only have 2.6% more hogs scheduled than on this date last year. From the H&P report one would expect something like +8.6%. This may indicate that producers now have 5% to 6% fewer hogs than the last H&P report suggested.

- The kill this week is 5.25% higher than the same period last year. From the H&P report the model projected an 8.0% increase. Hogs don't seem to be quite as plentiful as previously thought.

- Cutouts yesterday were up +8.90 since 4/24/15 suggesting that demand is fairly good and generally continues to show strength until retailers get their cases filled for the holiday rush.

These bullet points don't seem to be pointing to a bear for the KKKs.

So - This morning I bought seven KKKs as soon as I say that the final Purchase Index was very firm.

OOOPPPPssss! ! Ka! Ching!! another K/M spread was just off-loaded. I still have quite a few more to get off my boat. We are getting very close to that -3.00 spread. I'm pushing my luck and will hold out for something higher than the -3.0 before I sell again.

Best wishes,

dhm

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