515/18 was up +0.93 to 66.59. That is a bit more than the model projected but I won't quibble over the model missing it by 0.03. The MMMs are now trading premium to the component by +8.63. The model calculates that it will take an average daily gain of 0.40 by the component to close that "Gap". On average over the past 10-days the component has gained 0.376. On average over the past 11-years the Index has risen 0.99 from this date to cash settlement. In 2012 the index jumped 12.24 and in 2010 it dropped -9.87. Traders are thinking it will gain 8.63 this year and I think it won't so I am short the MMMs. Today the market is saying, "You're wrong!"

There will be a lot of price action between now and 6/14/18 so I will stay the course and see what happens.

The six-day moving average carcass weight eased to 213.75#. That is +2.77# year/year. Packer hogs continue to be heavier than the non-packer hogs by +4.17# and that was steady in weight. Non-packer hogs dropped about 1/3#. Index hogs were lighter at 212.79#. It appears that producers of index hogs are more current in their shipments than the other producers and packers are least current.

Over the past 200-days the percentage of packer hogs has been 32.94%. Over the past six-days the percentage of packer hogs has been 33.7%. That is down from the nearly 35% we were seeing. The heavier carcass weight of packer hogs suggests they not quite as current in their shipments as other producers.

The data continues to suggest that packers are choosing to hold their hogs back for higher prices and are bidding up the non-packer hogs to bring them in now.

Packers understand this business better than anyone!!

Yes, indeed. The Index is on the rise. The questions are how fast will it rise and how high will it go?

Best wishes,

dhm