6/20/16 was up 0.21 to 83.24. The NNNs are now trading premium to the component by +3.13 with 18 more days of data to get us to cash settlement.

The 6-day moving average carcass weight dipped to 210.70# this morning. The is -1.37# year/year. Packer hogs were 0.91# heavier than non-packer hogs. Index hogs were down and lighter at 209.36#. These number seem to me to be indicating that hogs are being shipped faster than they are being finished. Part of the reason is the hot weather is slowing hog growth but there may possibly be few hogs available. Currently retailers are probably filling their cases for the holiday weekend. As a result we may see packers with less appetite for hogs next week.

The fact that the component moved up less than projected by the model may be an early indicator that packers are already cutting back on their bids. Fortunately cutouts are holding up well so packers may not be under much margin-pressure to cut their bids.

My bias is that there is some risk that the index may struggle to close the premium "Gap" that traders have built into the price of the NNNs and they may have to retrace a little in getting to cash settlement.

But -

I won't bet the farm on it.

So I will keep looking for scalping set-up from either the lost or short side. This morning I have flipped a couple of NNNs and will keep looking for another set-up while putting some calendar spreads on my boat and hoping to get them off profitably.

Best wishes,

dhm.