7/28/14 was down $1.20 and the model projects that the CME Index component on the 7/28/14 kill will drop between -0.75 and -1.05.

It appears that producers are becoming motivated sellers. Packers purchased 120.5% of the moving average daily purchases yesterday with significantly lower bids. It has been a month since we have seen packers getting numbers like that. If the last H&P report was fairly accurate, and they have been quite good lately, then producers may have fallen out of currency to the tune of something like 380K hogs. With the cool weather, hogs are probably growing well so these hogs are heavies.

Looking at the kill rate yesterday, it may not take very long for producers to get current and them packers may not be able to keep their bids lower until the heavy fall numbers begin to show up. I don't think the large number of hogs purchased yesterday represents the beginning of the heavy fall kill, rather it is producers working to get current in their shipments.

The sell-off in the QQQs this morning has opened the Index/QQQ gap to 7.40. If the dip in the Purchase Index represents anxious producer selling, supply may tighten up a little before the QQQs expire and part of the "Gap" will need to be closed by the QQQs retracing a little.

I was able to bank the scalper I bought this morning and am now looking to buy again.

Best wishes,

dhm