5/25/16 was down -0.37 to 78.42. The has opened the "Gap" putting the MMMs premium to the component by 1.98. On average over the past twelve years from this date until the MMMs expire, the index has lost -0.61 however in 2013 it gained 9.07. It appears that supply and demand will rule. I was of the opinion that supply was going to be high enough to be a head-wind for the bulls to fight against but the firm cut outs may be painting a different picture.

The 6-day moving average carcass weight dipped ever so slightly to 212.82#. Index hogs stand at 211.54 and packer hogs have given up so much weight that they are only 0.77# heavier than non-packer hogs. It is beginning to appear that packer may have had a low inventory of hogs and were adding extra weight to compensate for their lower numbers.

I stayed long the MMMs on the spike this morning. I was tempted to cut and run and I may yet. As usual, when I get a directional bias, the market does the opposite.

Best wishes,

dhm