8/21/14 was 1.95 and my Hog Pricing Model projects that the CME Index component on the 8/21/14 kill will collapse by something in the range of -1.65 to -1.95.

The VVVs are trading at a discount of 11.88 to the index. It has closed quite quickly and could close another couple of points when the 201 report comes out this morning.

Packers did not make a very large purchase of hogs yesterday - 84.5% of the moving average daily purchases. This is not very surprising with a holiday just around the corner.

The model projects that the kill since 6/1/14 is running about 650K below the expected kill based on the last H&P report. The heavy carcass weights may also be confirming that producers are a bit behind in their shipments. If 650K of heavy hogs decide to keep their appointment with the packing plants, this could put a little downward pressure on the index.

The six-day moving average of packer hogs has been falling faster than the six-day moving average of non-packer hogs. This may indicate that packers are running a few more of their hogs through ahead of further price decline and they will then buy hogs cheaper.

The uncertainty about the VVVs has me leery of taking much of a position. I have a couple of longs that have been giving me a jolly ride but has scalped in and out enough to control the damage fairly well. The K/M spreads have drifted lower so I have bought a couple. The short Z/G spreads have treated me well and I have scalped in an out several times as they have retreated. I don't want to take all of my profits on them yet because I think the spread is still too high.

Best wishes,

dhm