The CME Lean Hog Index component on the kill for -

5/3/18 was UP +0.24 to 63.25. That was a bit less than projected but in the "Ball Park". The KKKs are now trading premium to the component by 3.10. The model calculates that it will take an average daily gain of 0.48 to close that "Gap". Since the KKKs became front month, the component has gained 0.67 per day.

But -

The rate of gain has dropped to 0.33 per day for the past 7-days. This is consistent with my observation that the "Gap" will make a strong effort to close when the futures become front month, then the rate of change will slow.

The six-day moving average carcass weight firmed to 214.64#. That is +2.01# year/year. It is especially the packer hogs that are heavier - now by +4.04#. On today's report packer hogs were up about 1/3# and non-packer hogs were down about 1/3#. Index hogs were lighter at 213.42#. It continues to appear that there are plenty of market ready hogs in the pipeline and it is especially packer hogs that are plentiful.

Over the past 200-days packer hogs have made up 32.96% of the kill however for the pas six days packer hogs have moved up to 35.1% of the kill. It is quite obvious that packers have expanded far more than the non-packers. I am wondering if packers are strategically trying to drive out the family farm hog producers or are they expanding in order to be assured that they have a steady supply of hogs to process? Mostly corporate egg production has killed the family chicken flocks and I suppose it could happen in hogs as well.

I'm still short the KKKs. I covered one yesterday and another today. I am now looking to sell more if we get a bounce.

Best wishes,