8/27/15 was down -$0.76 and the model projects that the component on yesterday's kill will fall between -0.15 and -0.45. Packers still have a fair inventory of more expensive hogs that may keep the component fairly firm for a day or two. We may be seeing the beginning of the drift lower that generally occurs after the Labor Day holiday. The discount of -11.61 that the VVVs have to the component tells me that traders have already priced in a fairly steep decline in the index.

On average from this date until mid-September when the index bottoms out there is a ten to twelve collapse in the index but it usually rallies six to eight points going into cash settlement. So far it seems to be following this general pattern but it could change in a hurry.

My boat load of V/Z spreads got into rough weather and felt it prudent to dump the cargo before it did much damage. Some trades turn out that way.

Best wishes,

dhm