111/10/16 kill was down -0.73 to 48.81. It looks like the cheaper hogs packers have purchased made it to the packing plants yesterday. They missed their appointment on Wednesday and that threw the projected change yesterday way off and when they showed yesterday it was off the other way.

With hogs being up today, they are trading high enough to have closed the "Gap" to -1.04 with the ZZZs discounted to the component. That is not much of a "Gap" and could quickly evaporate if packers continue their lower bids.

The six-day moving average carcass weight firmed to 211.66#. That is-2.48# year/year. Packer hogs continue to be heavier. This morning they are+3.26# heavier than the non-packer hogs. Index hogs are lighter at 210.50#. This morning packer hogs were a bit lighter and non-packer hogs were a bit heavier.

I keep wondering why packer hogs are coming in heavier.

Could it possibly be that packers have entered into some contractual purchase arrangements with some of the producers and they are duty bound to take those hogs and this forces packers to reduce the number of their hogs they can slaughter?

In comparing cut-outs to the index, I get a margin for packers of 26.10. That's pretty strong.

But it doesn't tell the whole story.

One of the numbers I track but don't often mention is a number I call "The National Average Cost of Carcasses". This is the blended average cost to packers under all purchase arrangements. I have to do a little extrapolation since there is no price on packer hogs.

This number came in this morning at 53.01 making packers margins $21.90. That is still favorable but quite a bit lower than the one above.

Best wishes,

dhm