5/12/15 was firm at +$1.08. Packers are still plenty happy to have hogs and they are paying up to get them. Producers didn't follow through with a particularly big offering. Packers only purchased 88.3% of the moving average daily purchases. The data yesterday showed that packers had 2.92% more hogs scheduled than on that date one-year earlier. From the H&P report I was expecting about 8.0% more.

It is beginning to appear that the high kill rate earlier this year represented some liquidation of market hogs and producers are now very current in their shipments. At least that is my interpretation of what the falling 6-day moving average carcass weights indicated.

One of the things that may be pushing packers to bid higher is retailers wanting to fill their cases in front of Memorial Day. I think that is what the +2.67 jump in the cutouts yesterday may be indicating. Usually this strength in the Index tends to peter-out after retailers stock up. With a bunch of short MMM tied to the expiring KKKs, I'm going to have to decide whether to hold them looking for the "Usual" to happen or to dump them thinking that the Index is now on an up-trend that will keep on going until we get to a price somewhat in line with last year.

One-year ago the CME Lean Hog Index was 112.91 compared to 79.09 yesterday. That's a big hair-cut on one year! 29.4%!

The model projects that the CME Lean Hog Index component on the 5-12-15 kill will be up between +0.85 and +1.15. That puts the projected cash settlement projection for the KKKs at 81.94 with a range of 81.44 to 82.44. I'm not feeling a lot of pressure to dump the long KKKs I have over-laid on top of the K/M spread I have working. I am plenty willing to get rid of some more of the long K/M spreads that are cluttering up the deck of my boat. The problem is that I think the spread is going to close up a little more and "The Market" is buying that idea!

Best wishes,

dhm