3/30/17 was down -0.41 to 68.10. The JJJs are trading discount to the component by -3.00. That seems to be quite a "Gap" with only ten trading days after today until the JJJs go to cash settlement. In the last nine trading days the component has dropped an average of -0.377 a day and all nine of those trading days were down days. There is no doubt about it, packers have a strong down trend going. Making the assumption that the down trend going forward will moderate to 90% of what happened the last nine days, then the model projects that the cash settlement index for the JJJs will be 64.53 with a range of 64.03 to 65.03. I am selling rallies and buying dips and keeping a couple or three short JJJs for good measure.

The 6-day moving average carcass weight firmed to 213.27#. That is -0.68# year over year. Index hogs are a bit lighter at 212.57# but that is also a bit heavier. Packer hogs continue to be +3.11# heavier than non-packer hogs. The percentage of packer hogs in the kill mix has not been quite as high the past few days.

Since the first of March the kill this year is slight more than % higher than one year ago. The H&P report pegged the 180# and up hogs at plus five percent. If the H&P report is correct, then producers have pulled hogs forward a little. That would be consistent with the carcass weight being slightly lower this year than last year. Even if hogs have been pulled forward a bit, there seems to be more hogs than demand wants at the current price level and prices are moving lower to find demand for this higher level of production.

How much lower?

I don't know but the model says just a little bit.

Best wishes,

dhm