8/2/17 was down -$0.43 and the model projects that the component on yesterday's kill will drop between -0.40 and -0.70. With the QQQs trading discount to the component by -5.31, it will take an average daily drop of-0.63 for the index to get down to where the futures are trading. The component has dropped an average of -0.49 in the past ten-days. Traders are thinking that the packers are going to get more aggressive in cutting their bids. I'm going to take a chance that the QQQs will end up tacking on a point or so by the time we get to cash settlement.

Packers purchased 97.8% of the moving average daily purchases of Index hogs yesterday. This suggests to me that producers have plenty of hogs to meet the packers' needs and they are willing to ship them. So I am thinking that it is the demand side of the equation that will drive the action that the packers take.

Yesterday the demand side did not look so good judging by the cutouts big drop.

Best wishes,

dhm