5/29/18 was up 0.21 to 69.62. The MMMs are now trading premium to the component by +6.63. We get 12 more days of data to get us to cash settlement. The model calculates that the component will need to gain an average of +0.58 per day to close the Gap". The average daily gain for the past 12 days has been 0.43. The appetite packers have for hogs will need to move up a notch to close that "Gap" or at least that is the way it appears to me. Packers were getting 76.34 on the carcasses yesterday. If packers can't scare up a little demand for the product, they are going to be a bit grouchy paying 76.40 for the carcasses and selling the the product for 76.34.

From this date to cash settlement, over the past 11-years the index has gained an average of 1.31. The most it gained was in 2012 when it tacked on 9.75. In 2010 it dropped 5.11. The Index dropped in five-years and gained in six. Las year it gained 6.47. It will be demand that will drive the index and it appears today traders are thinking demand will rise to meet the challenge.

The 6-day moving average carcass weight eased to 212.11#. That is +1.74# yr/yr. Packer hogs continue to be heavier now by +3.18#. Index hogs were lighter at 211.00#. Non-packer hogs were lighter by -3/4# and packer hogs were lighter by 1/3#. Hogs will finish more slowly in this warmer weather. Over the past 200-days, packer hogs have made up 32.98% of the kill. Over the past 6-days they have been 33.81%. It appears that packers are getting a bit more current in their shipments.

It looks like I picked the wrong partner to do the "Gap" closing waltz. Miss Short is not being any fun! If cutouts are strong today, I might take Miss Short to her seat and let her be
a wall flower.

Best wishes,

dhm