5//16/16 was up 0.51 to 77.41. The "UP" trend continues for both the Purchase Index and the CME Lean Hog Index. If it is going to break, it will likely break in the next couple of days now that packers have met the demand surge brought on by the Memorial Day holiday trade. On average over the past twelve years the index has dropped -0.42 from this date until the expiration of the MMMs.

But there is more to the story.

In 2012 it gained 12.24 and in 21010 it dropped -9.87.

In seven of the twelve years the index actually went down. Some years only by a very small amount but it did drop so the tendency for a decline is very strong and the tendency for a big jump is very small. Right now the "Gap" is 5.29 making it apparent that traders are significantly more bullish than history would suggest.

But history does not decide. Supply and demand here and now is what matters.

The six-day moving average carcass weight dropped nearly one-third of a pound this morning falling to 213.46# with both packer and non-packer hogs being lighter. That is +o.o4# year/year. Index hogs were lighter at 212.02#. Packer hogs continue to be heavier by 2.34# and that makes me wonder if packer's hog inventory is a bit light so they are holding for heavier weights.

Spread trades did me right proud yesterday after getting slammed by the K/M spreads last week. Today not much is happening. Just sold a Z/G spread at -2.75. I will most likely be a month to six-weeks getting rid of that thing but there are a lot of empty holds on my boat so that will be just fine by me.

Best wishes,

dhm