9/13/17 was down -1.14 to 64.57. That cut's the "Gap" to -4.75 with the VVVs trading discount to the component. Over the past 21-days the component has dropped and average of -0.90 per day. That's a serious decline. It only takes an average drop of 0.29 per day from now to cash settlement to close the "Gap" with the Index doing all the heavy lifting. The way packers are hacking away at their bids, they may close the "Gap" AND push the VVVs down another point or two.

One of the things that bothers me is the heavy carcass weights. This morning the 6-day moving average carcass weight moved up again to 210.66#. That's +1.55# year over year. I just can't get it out of my head that producers are falling behind in their shipments and there is no hint that carcass weights are collapse. Historically this is the time of the year when there is often a mild tendency for weights to go up. Packer hogs are nearly 1/2# heavier than non-packer hogs.

There is no hint from the cutouts that demand is firming.

Still short VVVs, ZZZs and Tums.

Best wishes,

dhm