10/5/15 was in line with the model's projection at +0.52. That puts the component on yesterday's kill at 74.05. The VVVs are discounted to the component by -0.45. With the index being on an up-trend, it appears to me that the VVVs are under-valued and would be more appropriately priced if they were mildly premium to the component. That being the case, I am now long a couple of VVVs. I have been successfully scalping in an out of some VVVs this morning.

The six-day moving average carcass weight this morning was 210.47#. That is -2.73 yr/yr. The carcass weight has gained a pound or two in the last month. My feeling is that this is more a reflection of a favorable growing environment rather than producers dragging their feet in getting their hogs marketed. The firm packer bids has me thinking that packers are not finding the supply of market ready hogs sufficient to meet demand that seems to be robust. At least that my interpretation of the jump cutouts made yesterday.

Historically there is quite a strong tendency for the price of hogs to be firm as we move toward the VVVs going to cash settlement. We are seeing that scenario play out again this year.

The boat load of short V/Z spreads I have working would make ITZ and Dewey proud of me for sticking to my system. It is also doing nice things for my margin and I don't have nearly as many of them as I had this morning. With space on my boat, I can add some more short V/Zs if we get a bounce.

Best wishes,

dhm