5/24/17 was UP +0.32 and the model projects that the component on yesterday's kill will be up between +0.15 and +0.45. The up-trend is still intact and that is counter to the historical for us to see some weakness following the Memorial Day surge in the Index. With the firm bids, packers purchased 97.7% of the moving average daily purchases of Index hogs. The 6-day moving average carcass weight of Index hogs has fallen from 214.23# on 4/22/17 to 210.64# yesterday. It appears that Index hogs are also being pulled forward by these higher bid prices. Sometimes the carcass weights will fall because the weather is not conducive to good hog growth. That is surely not the case now. I think this is very good weather for finishing hogs so I am left with the feeling that hogs are being pulled forward. The kill rate in slightly lower than projected from the last H&P report so my calculation is that between 440K and 470K hogs have been pulled forward. I think there is a good chance that the 3/1/17 inventory of market hogs will be rolled back when we get the next H&P report.

The MMMs are now trading premium to the component by +3.99. The model projects that the component will have to add 0.27 per day to close that "Gap". With the MMMs going o cash settlement about the time that packers are chasing down hogs to meet the Independence Day holiday demand surge, I think the index will move up to close that "Gap". And maybe bump the MMMs up a point or two.

Needless to say I am holding the long MMMs I'm riding bur it may be a bumpy ride if there is a post-holiday slide in the Index.

Best wishes,

dhm