6/8/18 was UP 1.34 to 76.48. The MMMs are now trading premium to the component by 3.92. The model calculates that the component will need to gain 1.10 per day to close that "Gap". It has gained an average of per day for the past four days. The MMMs may be appropriately priced now for cash settlement. I'm now out of the MMMs and watching from the side lines. For a while this morning it looked like I might get to take profits on some long Q/V spreads but they have now backed-off.

The six-day moving average carcass weight eased to 210.84#. That is +0.84# yr/yr. Packer hogs were lighter by 1/3# and they are now just 1.38# heavier than the non-packer hogs. The non-packer hogs weights were nearly unchanged.

Packer hogs have made up 33.03% of the kill mix over the past 200-days and the percentage has moved up to 35.35% over the past six-days. On Friday packer hogs were 41.7% of the kill. Perhaps packers knew hogs were going to be in shorter supply than usual this spring and that is why they have been finishing their hogs to heavier and heavier weights. The decline in the carcass weights of packer hogs would seem to suggest that they are getting current in their shipments.

Cutouts are not showing a lot of strength. This means that packer margins will not be in very good shape if they keep running the index up without getting the cutouts up. Perhaps they have some forwards sales made that are forcing them to buy hogs to meet their commitments.

Best wishes,

dhm