8/14/17 was down -$0.36 and the model projects that the component on yesterdays kill will shed something like -0.25 to -0.55. That will give us the other half of the cash settlement index for the QQQs. It is going to be quite close to the price at which the QQQs settled yesterday unless the packers have so surprises for us. We have now started the "Gap" closing dance for the VVVs and it also promises to be quite a fancy waltz! With the VVVs trading discount to the component by 15.39 there is going to be a lot of movement of something. Last year on this date the "Gap" was -7.22 and cutouts were at 76.40. This year cutouts are at 94.11.

I am of the opinion that fundamentals should not be ignored and it appears to me that the fundamentals are clearly saying that the VVVs have been beaten down too low in this high-demand environment. Most likely it is partially because of the sharp-off experienced in the index last year and partially because of the high numbers reported in the last H&P report. The kill numbers are not coming in quite as high as the H&P report suggested and demand is far greater than last year.

Yesterday I got long a few VVVs but surely not enough.

Yup. I also talk hogs much better than I trade them.

Best wishes,

dhm