3/1/17 was down -0.75 to 73.64. That was a larger drop than the model projected and it closed the "Gap" to -4.64 with the JJJs ar a discount to the component. We get 31 more days of data leading up to cash settlement. With today's larger than projected drop, it only takes an average drop of 0.16 per day to close the "Gap". Looking at the way packers are dropping their bids, it is altogether possible that they will get the component below futures before cash settlement and we will be seeing the futures at a premium to the index. A lot depends on demand and there is a lot of uncertainty how our foreign trading partners are going to be impacted by the rhetoric going on in Washington, DC.

The six-day moving average carcass weight moved up to 212.47# and it was the packer hogs that were heavier gaining 1/5#. Packer hogs are now +3.68# over non-packer hogs. Packers may be trying to liquidate their inventory of heavies. I say that because the percentage of packer hogs in the kill mix is a bit higher than usual. If packers are making an attempt to get more current in their shipments, they have a ways to go with their hogs being +3.68# heavier than non-packer hogs.

Mostly I am working the spread market but I do have four short 65 and 66 JJJ puts covered by five short JJJ futures. That seems to be too much coverage this morning.

Best wishes,

dhm

a lot depends o