3/6/17 was down -0.22 to 72.56. As I look at my trading screen I see that the JJJs are now trading at a discount ot -5.36 to this new component number.

The six-day moving average carcass weight eased to 212.34#. That is -0.41 year/year and -2.23# below the same date two years ago. Looking at these numbers, it just might be that the non-packer producers have been rather aggressive shippers of hogs and are now very current in their shipments. With the packers producers it is a bit different story. Their hogs are +3.40# heavier than than the non-packer hogs. Yesterday packer hogs constituted 34.69% of the kill. That is a bit higher than the 30% to 32% that I usually see. I don't know if packers could not find the hogs so killed their own or whether they are now deciding to get more current. At any rate, the kill is running a bit lower than suggested by the last H&P report. Index hogs were also a bit lighter yesterday at 212.44#.

There are 28 more days of data to get us to cash settlement for the JJJs. With a "Gap" of -5.36, it takes an average drop of -0.19 per day to get the index down to where the JJJs are trading. During the last nine trading days the average component drop has been -0.59. If that rate of decline continues, the index would really be trashed. e

I don't think that rate will continue.

More likely the drop over the past nine-days may represent the "Heavy Lifting" that needed to be done to improve packers' margins a little and we will see more muted declines going forward. We are a little far out for the model to project a cash settlement index for the JJJs but my gut feeling is that the JJJs will end up tacking on a point or two as their share of the "Gap" closing dance.

This morning I lifted some of the short JJJs that were covering the short puts. I wanted to get long the JJJs in the 66.50 area but they didn't quite go there today. Maybe this afternoon or later in the week. If not, I will have to be satisfied with with some put premium and maybe I will be able to wring a little out of some calendar spread trade .

Best wishes,

dhm