9/5/17 was DOWN -1.48 to 69.49. That has cut the "Gap" to -5.84 with the VVVs at a discount to the component. The model calculates that it will only take -0.25 per day to close the "Gap". Over the past 15-days the component has dropped and average of 93.3 cents per day. It looks like packer has already done the heavy lifting to get the "Gap" closed.

The 6-day moving average carcass weight firmed to 209.35#. That is +1.51# year/year. Index hogs were also heavier at 209.11#. PACKER HOGS were 1/4# heavier and non-packer hogs tacked on +3/4#. The low kill Monday would have backed hogs up a little but the steady increase in carcass weights makes me think that producers are running behind in their shipments and I'm suspecting that packers are slowing their chain speeds as they hack away at their bid prices. If hogs are in fact being backed up, they will HAVE to come to market and they will keep on gaining weight until they keep their appointments with the packing plants.

I have decided that - - - Ka!! Ching!! Just got interrupted and made a quick trip to the bank with the profits from a long K/M spread trade. - - - it is time to add to my short VVVs. It looks to me like there is a good chance that the declining index will push the VVVs a bit lower.

Kindly remember that I, like Farmer Ed, talk hogs much better than I trade them.

Best wishes,

dhm