9/28/16 was down -0.48 to 57.11 putting the VVVs at a discount of -5.25 to the component.

The six-day moving average carcass weight moved up to 209.21#. Packer hogs are now 1.03# heavier than the non-packer hogs having gained nearly 1/2#. Non-packer hogs were also heavier but not as much heavier as packer hogs. Index hogs moved up to 209.21#. The climbing carcass weights in the face of a heavy kill rate makes me think that producers are well supplied with hogs. It would be a good idea for carcass weights to be coming down to suggest that hogs are being pulled forward but that is not happening.

The combination of cool weather and fresh corn brings hogs to market in a hurry but a high kill rate that over-whelms demand also brings hog prices down. The primal cuts yesterday suffered quite a bit although bellies held their own but hams and loins really suffered.

Tomorrow we get the USDA will report their assessment of the hogs and pigs numbers. I'm expecting to see the inventory of pigs under 50# in the June report to be revised upward. I base this feeling on the higher than expected kill rate the past few weeks.

Traders have pumped-up the price of the front month futures this morning. It appears to me it is more because of technical/emotional factors rather than from the fundamental side. The reports I look at do not seem to point higher from a fundamental standpoint. Hogs futures have been beaten down quite badly so a bounce is understandable.

Still short the VVVs but it won't take much of a dip and I will be less short.

Best wishes,

dhm