5/22/17 was unchanged at 75.90. The MMMs are now tradiing premium to the component by +4.11. The percentage of packer hogs in the kill-mix yesterday was very large at 37.49%. That follows Friday's large packer-kill at 37.78%. Packers are shipping a lot of their hogs and the average carcass weight of packer hogs is -0.62# below non-packer hogs. At one point earlier in the spring packer hogs were approaching +5.0 pounds heavier than non-packer hogs. Since the first week in March the kill has been close to projected by the last H&P report.

But - - - -

It just might be that to reach this kill level, hogs have been pulled forward and the inventory of market ready hogs is less than suggested by the last H&P report. The six-day moving average carcass weight has now declined to 210.41#. That is -2.13# year/year. This means that we are losing about 1.0% in pork production from lighter weight hogs. This morning the carcass weight of both packer and non-packer hogs were down about 1/3#.

This morning the Purchase Index was down -0.01 which is not much but it is suggesting a trend-reversal. That is consistent with the historical pricing pattern that occurs following the Memorial Day holiday surge. With cutouts being up yesterday, it just might be that demand is going to be strong enough to dampen the index dip that is generally seen this time of the year. As long as packers' margins hold like they are now holding, I think packers will be bidding high enough for hogs to avoid much of a dip. Then when the INdependence Day holiday demand surge hits, the index will push higher and the MMMs will tack on a point or two.

That's my case for being long the MMMs.

Over the past few weeks I keep having profit targets hit on calendar spreads and more went this morning. My boat is riding so high in the water that it is tossing around like a cork on water. I need to get that boat loaded.

Best wishes,

dhm