6/16/17 was up 1.04 to 85.84. The NNNs are now trading discount to the component by -1.84. That is a reasonable discount in view of the dip in demand that may occur following the holiday. This may mean that the NNNs won''t have to give up much as we head into cash settlemet.

The six-day moving average carcass weight dipped to 208.59#. That is -2.13# yr/yr. Index hogs were also lighter at 208.72#. The percentage of packer hogs in the kill Friday was 41.05%. I don't remember ever seeing the percentage anywhere near that level before. This caused the weight of packer hogs to dip by more than 1/2#. My read on this is that packers could not find the hogs they wanted even though they were throwing lots of money at them, so they opted to empty their barns even further.

The numbers continue to point to fewer hogs than the USDA reported last time.

The dynamics may be right for expansion but the hogs that are going to be coming to market for several weeks now are already in the finishing pens and that number cannot be expanded! Expansion will show up as an increase in the breeding herd. I am expecting it will be the packer who will expand their herd more than the non-packers but that will not show up in the report this month..

Still long some NNNs and a couple of QQQs. I keep getting a chance to take profits on calendar spreads faster than I am adding new ones. My boat is riding too high in the water. I guess I need to re-load at a faster clip. These calendar spreads are treating me well. There seems to be an opportunity here for me to expand the trading activity with them.

Best wishes,

dhm