6/18/18 was up +1.21 to 84.70. The model really missed on that one but it did project strength and that caused me to get out of the long NNNs before the real crash hit. The model continues to be a handy trading tool. The broker's statement today showed that going to cash settlement with long MMMs did nice things to my margin and it was the model that gave me the guidance to get long and stay long. On average over the last 11-years the index gained 0.66 from this date until the NNNs went to cash settlement. The most it gained was 14.58 in 2014 and in 2007 it lost -7.92. It gained in five-years and lost in six.

HISTORICALS DON'T DETERMINE PRICE BUT SUPPLY/DEMAND FACTORS HERE AND NOW DO.
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And the model gives some guidance on what the numbers are saying.

The 6-day moving average carcass weight dipped to 208.80#. That is +1.28# yr/yr. Index hogs were lighter at 208.80#. Packer hogs were heavier than non-packer hogs by 2.02#. Not long ago packer hogs were running 217.5#. Hog weather and packers pulling hogs forward with their higher bids has really dropped the carcass weights and emptied out the hog barns.

Over the past 200-days packer hogs have made up 33.05% of the kill but for the past six-day the percentage has been 35.16%. This increased packer percentage has been going on for so long that I now think it is safe to say packers are expanding their production capability. I suppose it is possible that packers will vertically integrate to the point that the hogs futures market will die like the egg and belly market.

I came into today short some V/Z spreads. Today I have been able to take profits on all of them and now I am long the V/Zs. The highest cash settlement price for the spread was 14.62 in 2014 and the lowest was -1.90 posted last year. I may be in for a rough ride on the V/Zs again this year.

Best wishes,

dhm