10/4/16 was down -0.63 to 54.54. With the VVVs trading down, they are discount to the component by -6.74. My model projects that is too wide and the likelihood is quite high that the VVVs will make a one to two point POP as a part of the "Gap" closing process.

Generally when the model is able to make a cash settlement projection, it works out quite well and this is when I often do some of my best trading.

So-

I will hang my hat on its guidance and stay long the VVVs. That was a little tough to do this morning as the VVVs sold off in sympathy with the weakness in the rest of the hog complex. Oh! Well, it is only money. I just might ask, "Have any of you followed a hearse with a car-top carrier?"

I thought not. So I guess I won't be taking it with me to where I am going anyway.

The 6-cay moving average carcass weight firmed to 210.31#. That is -0.52# year over year. Packer hogs were heavier today by about 1/3# and that accounted for most of the heavier weights. It appears that packers have plenty of their own hogs to kill going forward.

When the PED virus hit, I thought packers suffered a bit more than some of the other producers. Now it looks like they may have over-reacted with more sows and now they have a larger inverntory of hogs to kill. That will burden down the price of hogs for the rest of the producers. Packer hogs are now +0.63# over non-packer hogs and index hogs continue to bring in lighter hogs at 209.22# which is unchanged from yesterday.

Best wishes,

dhm