3/6/17 was UP $0.02 AND the model projects that the component on the 3/6/17 d\kill will drop between -0.20 and -0.50. Packers still have a fair-sized inventory of cheaper hogs that may keep the index weak for another day or two even if the packer continue to firm their bids. With a bit better bids, packers were able to make a fairly good purchase yesterday at 92.3% of the moving average dily purchases.

The JJJs are now trading discount to the component by -5.43.

The kill for the past four weeks has been mildly below estimates from the last H&P report and packers are continuing to finish their hogs to heavier weights. The volatility in the product especially the bellies has caused me to wonder if we are going to see a major collapse in pork prices. The weakness of the kill and present firmness in product prices has me thinking that we are probably not going to see a horrendous drop in pork prices between now and when the JJJs expire. The JJJs are now trading discount to the component by -5.18. That is not a huge "Gap" but too big to totally ignore. Rightly or wrongly, I now believe that the JJJs are going to have to do a little bit of the "Gap" closing so I have lifted some of the short JJJs covering the short puts and I will probably get long the JJJs if there is much of a dip today and fly with naked JJJ puts.

Best wishes,

dhm