6/12/17 was up $0.71 and the model projects that the component on the 7/12/17 kill will drift up between +0.45 to +0.75. With their higher bids packers purchased 96.0% of the moving daily purchases of Index hogs. The carcass weights of Index hogs continues to drift lower. Hot weather may shortly begin to slow finishing hogs and we are still faced with the potential of a holiday-induced demand surge. Both the MMMs and NNNs are trading about a buck and a half premium to the component. This does NOT set the stage for the NNNs to do a "Gap"-closing jig lower when they become front month. The "Gap" is not significant but supply IS significant because supply and demand ALWAYS determines price.
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And the supply of market ready hogs appears to me to be lower than the last H&P report indicated.

At the same time demand is firm apparently driven by export demand.

Shortly the USDA will have the opportunity to use a little hind-sight to look at the last H&P report and fix it.

The model shows that the it takes an average daily gain of 0.65 in the component to close the "Gap". That's quite a load but I'm suspecting the holiday demand and short supply might make it happen so I am staying long the MMMs.

Now I have to start thinking NNNs. The market dynamics seem lined up to be supportive for the NNNs just as it has supported the MMMs.

Calendar spreads have been very active the past couple of days. Today I was able to get a July/August spread off my boat that had been gathering dust since 8/11/16. Sometimes it take a long time for these calendar spreads to mature.

Best wishes,

dhm