7/21/14 was down $0.51 and the model projects that the component on the 7/21/14 kill will drop between -0.30 and -0.60. On average over the past ten-years, from this date until the expiration of the QQQs, the Index has gained 1.84. However it lost 10.84 in 2009 so there is a lot of price volatility in the index this time of the year.

Undoubtedly this volatility will be reflected in the GGGs as traders try to figure out where hog prices are headed.

Packers were able to make a solid purchase of hogs yesterday at 103.4% of the moving average daily purchases. It just might be that producers are beginning to capitulate and become motivated to ship hogs as they see prices beginning to slip. If the last H&P report was fairly accurate, producers may have as many a 288K heavy hogs backed up. That's not a huge number, but it is enough to pressure the index a little if producers want to get current in their shipments in a hurry.

Yesterday's drop in cut outs is a bit worrisome about the strength of the demand side of the equation.

I'm hanging onto a few Q/V spread together with some short Z/G spread while I watch to see how the demand side unfolds.

Best wishes,

dhm