8/25/15 was DOWN -$0.38 and the model projects that the component on the 8/25/15 kill will be down between -0.05 and -0.35. This will be the fifth consecutive down day for the index. The amount that it is dropping does not amount to very much, but it is down and not UP. Historically there is a powerful tendency for the index to show a lot of weakness following the Labor Day holiday.

On average from this time of the year until mid-September when the index hits it trough, it drops about 12-points. With the VVVs trading discount to the component by 11.61, traders have pretty much priced this drop into the VVVs. What they have not done, though is priced in the 11-point rally that is historically seen from mid-September until the VVVs go to cash settlement.

What does this mean?

Well, I think it means that we are going to see an unusual amount of volatility over the next six to seven weeks and ITZ is going to have a ball fishing both ends of the pond. And the most excitement I have may well be reading ITZ's posts. I say that because trading these spreads has all the excitement of watching paint dry.

The six-day moving average carcass weight continues to dribble a little bit lower and this has been going on since 6/5/15. I believe Producers are staying quite current in their shipments. With the kill running a bit higher than projections, it just might be that a little more expansion took place than the USDA reported. There is about six-weeks before we get the next H&P report to give us an up-date.

This morning I have partially loaded my boat with short V/Z spreads. I ferried a couple across the pond yesterday and am getting a fair sized load to head to sea.

Best wishes,

dhm