9/20/17 was down -0.81 to 59.72. The component has been on a continuous losing streak for the past 26-days and has lost an average of 91.4 cents per day during that time period. That's serious business!

The six day moving average firmed to 210.74#. That is +1.09# year/year. It just might be that the fall compensatory growth period is about to begin and hogs will be finishing like gang-busters. Index hogs were also a big heavier at 210.30#. Packer hogs were steady in weight while the non-packer hogs were about 1/5# heavier. Packer hogs were running about 0.39# heavier than non-packer hogs yesterday. Packers are doing no better than the non-packers is keeping their shipments current.

From the noon reports the model projects that the Purchase Index will come in down -$0.82 and the component on today's kill will drop between -0.75 and -1.05. Packers are now bidding in the 40s for negotiated hogs.

The Hog Cycle has not been repealed and we are still in the chase for the "Valley" for this cycle. The Model says we DID NOT see it today with the component drop to 59.72 in the component today. It is going to be lower still tomorrow. If the last H&P report was nearly correct, there is a back-log of 350K or so of heavy hogs backed up in producers' barns. They will come to market this fall. Will they hit and trash the VVVs or will they come later and trash the ZZZs? Or was the H&P report wrong and they are not even out there?

I dunno. But the rising carcass weights cannot be ignored.

Still short the VVVs and ZZZs. Tried a couple of scalps today but didn't get anything. I did make a couple of trips to the bank with some profits on short J/K spreads. And on the dip I went long the J/K spread. That may have been a mistake!

Best wishes,

dhm