6/12/15 was down -0.43 to 81.19 and the cash settlement index for the MMMs came in at 81.40. That cost me a couple of Benjamins.

The NNNs are now trading discount to the Index by 4.16. Traders are thinking that packers are going to be hammering the index down a fair amount over the next month. Generally that is not what happens. On average the Index will tic up a couple of points as we go into the Independence Day holiday. The problem is that we have plenty of hogs this year. Last week the kill was up 11.18% over the same week last year and the 6-day moving average carcass weight this morning was 213.77# that is +7.38# heavier than in 2013 but down -2.24# from 2014. Packers seem to be having a little problem moving the product and had to settle for cutouts down 1.64 on Friday.

It won't be long until we get the next quarterly H&P report. The high kill rate we are seeing and the low price of corn, I'm thinking that the report may show a little more expansion of the breeding herd. Looking at the way traders are taking the ZZZs down, there obviously are a lot of other traders thinking the same thing.

I was short the ZZZs but now I am flat the ZZZs and long $$$.

Best wishes,

dhm