9/12/17 was down -1.33 to 65.71. The VVVs are now trading discount to the component by -6.76. Thar is still a lot of "Gap" but the drop in the component today shows that packers know how to close "Gap". On average over the past twenty-days the component has dropped an average of 88.9 cents per day. It now takes and average drop of -34.8 cents a day to close the "Gap" if all of the closure is to come from a falling index.

The six-day moving average carcass weight was a bit weak at 210.87#. That is +1.77# yr/yr and continues to suggest to me that producers are behind in their shipments. Packer hogs are +0.41# heavier than non-packer hogs. It is difficult to know why producers are behind in their shipments but my sense is that packers have opted to slow down their chain speeds with the declining pork prices. If so, that really does not solve the problem of over-production rather it makes it worse because those heavy hogs will put on more weight and they WILL be killed. The question is WHEN and at WHAT PRICE?

Sill short the VVVs.

Perhaps it is time for you to get long the VVVs. I say that because so often when I get a directional bias, the market goes in the opposite direction.

Best wishes,

dhm

"In the hog market you can always expect the un-expected" Long Bear