6/28/16 dropped -$0.41. With cutouts soaring yesterday, I thought perhaps packers would to spending a little more money to buy hogs.

But NO! They are using the extra money to widen their margins.

They still have some more expensive hogs purchased that are still in line for the packing plants. This will be a bit supportive of the index. The model projects that the change in the component on yesterday's kill will be in the range of UP 0.15 to down 0.15. This is essentially unchanged but it may be signaling the up-trend we have had going is about to peter-out and there may now be some weakness in the index.

That is obviously what the traders are thinking because they have kept the NNNs discounted to the component. The NNNs settled last night at -1.87 discount to the component.

Packers only purchased 91.4% of the moving average daily purchases. The Monday daily purchases were strong at 122.1%. Maybe packers loaded up on Monday and decided to coast on Tuesday or maybe producers were not going for the lower bids.

The pre-opening suggests I may be able to take profits on a long NNN.

Best wishes,

dhm