6/20/16 was up $0.43 and the model projects that the CME Lean hog index component on yesterday's kill will jump between +0.35 amd +0.65. The NNNs settled premium to the component by +3.39 last night. There are not eighteen tradiing days until the NNNs go to cash settlement. That is surely enough time for the packers to drive the index up to where the NNNs are trading.

With their higher bids, packers were able to purchase 100.2% of the moving average daily purchases yesterday. And they killed a few more hogs than projected from the last H&P report.

Looking at the declining carcass weights, particularly in the index hogs, and the steadiness of the cutouts, I believe the supply/demand factors are looking favorable for the producers. With hot weather slowing the finishing of hogs and demand holding firm, packers are having to keep bidding higher to bring the hogs to market. It is my feeling that scenario will play out until the NNNs expire.

So -

I prefer the long side of the NNNs and if Lady Luck rides with me, there may be some help to the batch of long N/Q spreads I have piled onto my boat.

Best wishes,

dhm