2/28/17 was down -$1.00 and the model projects that the component on yesterday's kill will drop between -0.45 and -0.75. With their lower bids packers purchased 88.4% of the moving average daily purchases. That's a little soft but in the "Normal" range for a Monday. Yesterday the JJJJs settled discount to the component by -7.50. "The Market" continues to believe that packers are going to have difficulty selling all the product and will end up dropping their bids over the next 32-trading days. Packers did a commendable job selling pork yesterday and the cutouts moved up +1.49. That more than wiped out Friday's loss.

I feel compelled to keep my eye on the component when I am trading the front month because that is the underlying for what I am trading. So far this week the kill rate is coming in a bit higher than projected. The 6-day moving average carcass weight suggest to me that producers are quite current in their shipments except packers may have held back to heavier weights to meet sold pork or something. They should know what they are doing, though.

I am continuing to focus more on the calendar spreads and day trading the JJJs since the large "Gap" has me spooked.

Best wishes,

dhm