The final Purchase Index for Thursday came in at -$0.16 and the model projected that the component on Thursday's kill would be down between -0.10 and -0.40. When the 201 report came out it showed that the component was actually down 0.29 to 65.24 on Thursday's kill. Once again the model hit the number quite well.

The six-day moving average carcass weight firmed to 213.83#. That is -0.54# yr/yr. Packer hogs continue to be quite a bit heavier at +2.28# over non-packer hogs. Index hogs are now running about the same as the six-day moving average carcass weight.

Cutouts continue to drift mildly lower. I think broiler are giving a lot of competition pork.

From the afternoon reports on Friday the model is projecting that the final Purchase Index for Friday will be down sharply by $0.79 and the component on Friday's kill will drop between 0.30 and 0.60. The JJJs settled premium to the component by 4.38 on Thursday and another drop in the component could send it even higher with just 14 trading days to cash settlement. I keep harping in the idea that we could see a significant drop in the JJJs to get them moving in lock-step with the Index.

I still feel that way.

But I won't bet the farm on it!

The H&P report showed that the USDA made quite a few revisions to the previous reports with significant numbers being added to the inventory of market hogs. One number in the report that caught my eye was the June to August farrowing intentions. It was pegged at down 3% from the 2015 that had been revised up. If there continues to be an increase in the pigs per litter to say 10.48 we will end up with a June to August pig crop of of 30,518 down 2.6% from last year. This has the potential of escalating the price of the ZZZs relative to the VVVs. This makes me more inclined to sell the V/Z spread rather than buy it.

Mostly, though, I thought the report was fairly neutral.

I will try to up-date the Purchase Index for Friday when the morning reports are released.

Best wishes,

dhm