5/7/18 was up 0.04 to 63.35. The KKKs are now trading premium to the component by 3.05. The model calculates that the component will need to jump by an average of 0.68 per day to close that "Gap". Since the KKKs became front month, the component has gained an average of 0.59 per day. This makes it appear like the KKKs are going to need to dip a little to close the "Gap". The rub comes from the fact that packers sometimes find themselves short-bought in front of the Memorial Day grill-out. Under those circumstances packers have been know to add three points in one-day.

So -

I made a few trips to the bank by covering some short KKKs. I always like to match wits with the market at cash settlement so will save some to go to cash settlement.

The 6-day moving average carcass weight eased to 214.09#. That is +2.10# yr/yr. Packer hogs are heavier than the non-packer hogs by 4.08#. Index hogs are lighter at 212.73# and that is down a bit. Both packer and non-packer hogs were about 1/2# lighter.

The 200-day moving average percentage of packer hogs was 32.96% and the 6-day moving average was 34.80%. We are still seeing packer expansion, I think and not liquidation of market hog inventory.

Best wishes,

dhm