3/21/17 was down -0.04 to 71.46. The weakness in the JJJs has opened the "Gap" to -3.46 with the JJJs being discounted to the component. There are so many forces a work that it is difficult to get a handle on where we are headed. One thing that is clear is that the kill rate for the past two weeks is finally approaching the level projected from the last H&P report. So far cutouts are holding up quite well but will it continue?

The 6-day moving average carcass weight eased to 212.60# with both packer and non-packer hogs dropping about 1/3#. That is -0.38# year/year. It appears that generally producers are keeping current in their shipments. Packers are still bringing their hogs to market at +3.43# over non-packer hogs.

Because the kill rate is now going up, I am of the opinion that there is limited upside potential for the JJJs. Packers are moving the product quite well and their margins are all right. If that continues, packers will still want to kill hogs so the "Gap" may be about right to absorb the slow decline in the Index that we are now seeing. I'm flat the JJJs and waiting and watching for a scalping set-up.

Best wishes,

dhm