4/18/16 was up +0.32 to 66.87. The strength of the KKKs this morning has opened the "Gap" to 9.18 with the KKKs premium to the component. That's a lot of "Gap".

But demand appears to be fairly good with cut outs tacking on nearly a buck yesterday.

The 6-day moving average carcass weight dropped nearly half a pound yesterday falling to 214.38#. That is +0.12# yr/yr. Packer hogs are 3.39# heavier than the non-packer hogs. Index hogs hogs are lightest of all at 212.59#. I keep watching these numbers trying to see if there is any significance to them.

And there might be.

It might be telling us that packers know there is an impending shortage of hogs so they are finishing to a heavier weight. The lighter index hogs may mean that producers of index hogs are very current in their shipments. The declining carcass weight may be telling us that hogs are being pulled forward to meet the daily kill rate.

Looking at the numbers like this, it does not appear that there is much bearish information in the carcass weight arena.

Looking at the kill numbers since 3/1/16 there has been a shortfall of about 1.5% from what the last H&P report suggested. We are now into the next lighter weight kill category and the kill should be higher than last year. So far it isn't happening. It is possible that the USDA over-estimated on the hog inventory and packers know this so they are finishing to heavier weights.

I had been looking at the "Gap" thinking it was too wide.

Maybe, just maybe, the data is beginning to tell me I need to adjust my thinkiing.

This I know - I have been able to off-load most of my long K/M spreads at a profit and have a nice inventory of M/N spreads in case the bull spreads begin working.

Best wishes,

dhm