8/2/17 was down -0.29 to 86.97. The components are going to need to drop much faster than that if the "Gap" is to close from the index side. With 8-days of date before cash settlement, the model is now showing that the component willl need to drop an average of 0.72 per day for the next eight days. At this point, that does not seem to be the magnitude of the down trend we are on. Of course with a few more days of sharp decline in the cut outs and things could change.

The six-day moving average carcass weight moved up to 206.92#. That is only -0.92# under where we were one-year ago. Producers may be finishing hogs a bit faster than they are shipping them, especially the packer hogs. Packer hogs were heavier by 1/4# and that is what caused carcasses to be up. Index hogs were also heavier at 207.13#.

Still long the QQQs and short a lesser number of VVVs.

Best wishes,

dhm