In 1876 Samuel Brenner wrote, " The advance and decline in the value of hogs for the twenty years past is as alternately certain as the diurnal revolutions of the earth upon it axis."

I think he was saying was that just as sure as the sun comes up in the morning we will have had (will have) hog cycles. The Hog Cycle is so powerful that it has been referred to as the "Classic Production Cycle."

Looking back, we can plainly see that the "Peak" in hog prices occurred following the PED problem. After the "Peak" comes the "Trough". "Troughs" are ushered in when supply outstrips demand. At this point there is no cutting back on supply. The piglets are born, on the ground and in the finishing pens. But they have not been coming to market in the numbers projected from the last H&P report. The climbing 6-day moving average carcass weight seems to confirm this.

And all the while demand seems to be eroding away as manifest by the declining cutouts. On 7/20/17 bellies were reported at 215.81. Yesterday they were 107.05. That's one terrible hair cut that they have suffered.

There is significant uncertainty relative to where the index will be on 10/13/17 when the VVVs go to cash settlement. The market dynamics may be telling us that it won't be much higher and could be a bit lower or even a lot lower.

And so I continue to talk hogs much better than I trade them and just remember, when I get a directional bias, the market often does just the opposite!!!

Best wishes,

dhm