7/29/16 was down sharply, dropping -$1.04 and the model projects that the component on Friday's kill will slide between -0.70 and -1.00. Last week cutouts were down nearly ten points. I don't think packers are very happy about that and they will most likely respond with another round of bid drops. I was beginning to think that QQQs might stabilize in the 68 to 70 area as we move toward expiration in two weeks because of the -4.12 discount they are running to the component. A lot of "Gap" closure takes place with daily dips of a buck or so.

The QQQs might have to work a little lower.

The VVVs are at a discount of -13.44 to the component. The is quite a "Gap" but there is a lot of time for packers to cut their bids between now and 10/14/16. The kill for the last three weeks has been 2.3% greater than the same time-period last year. That is more than 1.0% higher than projected from the last H&P report. It just might be that the last H&P report was a fairly good report. It's just that the USDA was a little off in their weight categories. Now those hogs that were missing in June are now coming to market. Fortunately they are a bit lighter than last year so the is keeping to amount of product down a little.

But demand is still being a bit over-whelmed.

I'm going to stick with a couple of short QQQs and will sell again if there is a little bounce..

Best wishes,

dhm