10/5/16 was down -$0.63 and the model projects that the component on the 10/5/16 kill will drop between -0.50 and -0.80. Hogs continue to head lower. Traders have opened the "Gap" to -6.32 with the VVVs being at a discount. The model projects that is a little too wide and the VVVs stand a good chance of tacking on a point or two to close that "Gap" by next Friday.

This is an unusual time in the hog market, that's for sure. A market like this only comes around once or so in a decade. Cutouts held up well yesterday but the 6-day moving average carcass weights continue to be firm and this adds poundage.

I believe a repeat of the 1998 debacle will occur only if packers' kill capacity is overwhelmed. That does not appear to be the case yet.

Still long the VVVs and may go to cash settlement with a few.

Best wishes,

dhm