7/15/16 was down -$0.73 and the model projects that the component on Friday's kill will dip between -0.50 to -0.80. With their lower bids, packers were able to make an adequate purchase at 99.5% of the moving average daily purchases.

The QQQs are trading discount to the component by -2.20. Traders are expecting that packers will continue cutting their bid prices until the QQQs expire. And they might.

As I look at the kill since 6/1/16 my numbers are showing that the kill this year is below last year by -0.08%. That amounts to essentially the same kill. The last H&P report pegged the inventory of the 180# and heavier hogs at +1.20%. From that I'm thinking the kill since 6/1/16 should be higher than it has been and so I am searching for an explanation.

If the total inventory of market hogs in the last H&P report was correct, then maybe producers are falling behind in their shipments. Why? Maybe because of hot weather. It is not because producers are holding back in shipping hogs because carcass weights are not getting heavier.

Another possibility is that the total inventory of market hogs was correct but they were in lighter weights than the USDA reported. This is a real possibility and if that is the case, there will be larger numbers of hogs coming to market when new crop corn hits the hog feeders and finishing weather enables some compensatory growth to take place after the hot-low-growing doldrums. If this is the case, we are going to see the VVVs and ZZZs take a hair cut when large number of hogs make their way to the packing plants.

This scenario is my bias but there is also the possibility that the USDA mis-counted and the inventory of market hogs is somewhat lower than shown by the last H&P report.

I will be buying more Q/V spreads on a dip.

Best wishes,

dhm

rogs are not finishing because the