8/13/14 was down -$1.85 and that is the same amount as it was down yesterday. Packers really have the Index on a slippery slope downhill. This was the 21st consecutive day for the Purchase Index to be down!!

The model projects that the component on the 8/13/14 kill will be down between -1.30 and -1.60. If we get the full -1.60, then the index component on yesterday's kill will be 115.77 and that will be 50% of the cash settlement index. The model is projecting that it will then require the index on today's kill to drop to 113.45 in order to bring the cash settlement index down to 114.60 where the QQQs are trading.

It appears to me that packers still have quite an inventory of more expensive hogs already scheduled so it may be a stretch to make a one-day drop of the -2.32 needed to bring the cash settlement index down to the QQQs. I have loaded my boat with long QQQs on this dip. I will be in big trouble if I swamp my boat.

It may be the weakness in the VVVs that is causing the short Q/V spreaders to exit their positions and drive the QQQs down.

Best wishes,

dhm