8/20/14 tanked by -$2.03 and the Hog Pricing Model projects that the CME Index component on the 8/20/14 kill will take a dive of between -1.65 and -1.95.

The CME Index turned lower on 7/16/14. Since that time it has been down for 25 consecutive days and the average daily drop has been 1.04. The drop seems to be accelerating. Over the past five days the average daily drop has been -1.81.

A lot of gap can be closed between now and 10/14/14 with daily drops of that magnitude.

And there is a lot of gap to close. The decline in the VVVs this morning has opened the gap to 16.84.

There are several bits of hog data that I am watching. The kill rate since 6/1/14 is showing 588K fewer hogs killed than projected from the 6/1/14 H&P report. With carcass weights running more than eight pounds heavier than one-year ago, there is a possibility that producers have fallen out of currency in their shipments. If that is the case, those heavy hogs will be coming to market and they may arrive at about the same time that the fall slaughter bulge gets here.

Packer hogs are now weighing somewhat less than the non-packer hogs. Perhaps packers have been hurrying their hogs to market because they know they can buy hogs cheaper a bit later.

These bits of data are not really "News" but they do seem to suggest that hog prices are heading lower just like they almost always do this time of the year.

The only thing bullish I am seeing is the fact that the VVV to Index gap is at a historically high level.

When the QQQs were moving toward cash settlement, I chose to trade the gap with some long QQQs and it didn't work out very well.

I don't think I will do that with the VVVs. At least now quite yet. I'm still short a couple of VVVs and have sold a V/Z spread.

Best wishes,

dhm