8/16/16 was, contrary to the model's projection, UP BY +0.21 to 67.27. I was a little baffled by that number and went back and checked and re-checked and that's what I got. That has opened the "Gap" to -7.30 with the VVVs being at a discount to the Index. Obviously traders believe packers are going to be bidding lower and lower. It was the more expensive hogs that kept their appointment at the packing plants yesterday.

And they just might be right because there is a powerful tendency for the kill rate to move up in the fall.

The six-day moving average carcass weight fell to 207.03# this morning. That is -20.6# year/year. It appears to me that producers are very current in their shipments. Both packer and non-packer hogs were lighter weight. The index component of the non-packer hogs were lighter weight still at 206.82#. That was also down.

Packers are having trouble selling the product which they must do. If producers have liquidated some of their inventory of market hogs as I think the lower carcass weights is suggesting, the glut of pork this fall may not be quite as dire as some reports have hinted. The fact remains, though, that there is almost always weakness in the fall as the larger spring farrowings come to market.

Today I'm mostly working on the T-Bond side of my portfolio.

Best wishes,

dhm