10/16/15 WAS down -$0.39 and the model projects that the change to the component on yesterday's kill will be in the range of +0.05 to down -0.25. Packers may still have a few higher priced hogs purchased that could be a little supportive of the component if they chose to run them through the packing plants on Friday.

The ZZZs are trading discount to the -9.32 so it looks like packers can take quite a bit off their bids and the ZZZs could need to rally a little to close the "Gap". I wanted to take a long position on Friday and ride it for a while but the ZZZs hit my stops too fast and flushed me out. I'm now back looking for the next dip to get in again. It may have come this morning and I missed it .

I am long some V6/Z6 spreads. I think the spread of 2.25 is too narrow and sometime in the next while it will widen to the 4 to 6 point range. On average over the past 13-years it has gone to cash settlement at 4.12 and has settled at high as 14.615 in 2014.
There is a flip side. In 2003 it settled at -5.07 so there is risk. I doubt that we are looking at a repeat of 2003!

Best wishes,

dhm