8/31/15 was down -$0.44 and the model projects that the CME Lean Hog Index component on 8/31/15 kill will drop between -0.20 and -0.50. we seem to once again to have a down-trending index. Even though packers were bidding a bit softer for hogs yesterday, they made a solid purchase at 105.1% of the moving average daily purchases. Producers seem to be willing sellers and the mildly declining 6-day moving average carcass weight suggests that producers are keeping quite current in their shipments.

The kill rate has been coming in a little stronger than projected from the last H&P report. This has me thinking that producers are well supplied with hogs that will be coming to market over the coming weeks. The firmness of the cutouts yesterday makes it appear that demand is strong enough to carry-off the pork at this price level with no problem.

The strength in the VVVs and the weakness of the index has closed the "Gap" to -8.84. On average on this date the Index drops about 17 points from the expiration of the QQQs. This year it has shed only 1.26. This tells me that this year is NO AVERAGE year. What it does not tell me is what to expect going forward. Based on this high degree of uncertainty, there will most likely be a lot of volatility as traders come to grips with the day-to-day data points that come available to them. Based on the high kill rate and the heavy carcass weights, I have a mildly bearish tilt to my thinking but not enough to get wildly short this market but I do have one short VVVs.

Best wishes,

dhm