5/11/18 was, just as projected, up +0.47 to 64.88. That is 50% of the cash settlement index for the KKKs. With the KKKs settling at 65.05, the model is showing that it will take a jump in the component on today's kill of +0.74 to close that "Gap". We have not seen a one-day jump of that magnitude since 4/24/18 and I will be a little surprised if we see it on today's kill. Packers made a fairly good purchase on Friday and Saturday and that would suggest they were not under a lot of pressure to chase hogs today. Cutouts were nearly unchanged today so demand is steady but not robust.

The 6-day moving average carcass weight was steady at 214.23#. That is +2.40# year over year, Both packer hogs and non-packer hogs were a bit lighter but packer hogs were still +4.17# heavier than the non-packer hogs. The percentage of packer hogs in the kill-mix dipped to 30.76%. I don't think that indicates that packers are getting current in their shipments, rather I think they are choosing to kill non-packer hogs and will bring their hogs to market in a few days when the prices are a bit higher. The 200-day moving average percentage of packer hogs was 32.96% and the six-day moving average is still firm at 33.81%. The heavier weights of packer hogs makes me think that we are going to continue seeing strong numbers of packer hogs coming to market.

The MMMs settled premium to the component by 11.00. The model projects that it will take an average daily change in the component of +0.488 to close that "Gap". Over the past 13-days the component has risen an average of 0.30 per day. With the Mothers Day surge now behind us and most likely retailers have placed a fair number of their Memorial Day orders, I think it will be a stretch to get an average daily gain of 0.488 a day for the next twenty-two days. I'm counting on the MMMs having to give up a couple of points during the "Gap" closing waltz.

So-

I took the opportunity to get short some MMMs when they bounced today. The Hog Pricing Model has been a handy trading tool the last few expiration cycles and hope it doesn't let me down this time. Actually it has been working well for a few years now.

When the cattle dipped today I was able to cover a short June cattle/hog spread. That spread has really treated me well this spring. I covered it too soon today but I'm happy. Thanks for introducing me to it, ITZ.

Best wishes,

dhm