7/17/15 was down -$0.32 and the model projects that the CME Lean Hog Index component on the 7-17-15 kill will drop between -0.05 and -0.35. This just might be the beginning of a down trend in the Index. Traders have been anticipating this because they have bid the QQQs down until they are discounted to the component by 4.29.

I'm beginning to wonder if that is enough of a discount.

For a short while I have been wondering if the USDA over-counted the nation's inventory of market hogs. Recent data seems to be suggesting that my wonderment was not reality.

Here is why I say that:

- Since Monday July 6th the six-day moving average carcass weight has moved up to 211.15# from 211.01#. To be sure, that is an insignificant gain but it is a gain and generally weights are going down this time of the year. Last year during the same time period the weight moved from 215.87# down to 215.41#. Producers may not be keeping really current in their shipments.

- The kill last week zoomed up to +13.77% over the same period last year. It had been looking like it might be as low as +7 or 8 percent but when the week ended, a lot of hogs had been killled.

- On Friday packers had 15.7% more hogs scheduled than they had on the same date last year and they were able to line up these hogs with declining bid prices. Producers don't sell hogs for "Less" this time of the year unless they have "More" hogs in their finishing pens. At least that is my perception of producers' marketing tactics.

- I talked to a sheep producers from the west and he told me that lamb kill is backing up because freezers are full of other meats and poultry. I don't follow sheep kill so don't know if this is factual or not but the last meat production report shows lamb/mutton down 7.1% from the same week last year and the last cold storage report did show quite a lot of meat and poultry in storage. We get another report on 7/22.

I'm mostly spread hogs because I don't know where we are headed but my bias is lower.

Best wishes,

dhm