9/12/16 was down -$0.37 and the model projects that the component on yesterday's kill will drop between -0.20 and -0.50. The Purchase Index has only been up a couple of time is the past six weeks or so. We seem to be on a powerful down trend. Traders appear to be thinking it is going to continue for a while longer because the have beaten the VVVs down to a discount of -4.58 at last nights settle.

With the six-day moving average carcass weight holding firm as well as the kill rate, there is quite a good chance that traders are right, there is more downside coming to the Index. If there is some compensatory growth to hogs when the weather cools and fresh corn begins to flow, it is possible for the VVVs to collapse more than the "Gap" suggests.

I'm still short the VVVs and have my boat laden down with short V/Z spreads. I got one off yesterday, but, gracious, I still have more than I probably ought to have.

Best wishes,

dhm