10/11/17 was up +0.85 and the model projects that the component on yesterday's kill will be up between +0.60 and +0.90. The VVVs settled premium to the component by +2.42. The model calculates that the component will need to jump an average of 97.5 cents per day to close that "Gap". Over the last 7-days the component has risen an average of 66.7 Cents per day. It may be at or near the cash settlement index now.

With their higher bids yesterday, packers purchased 85.3% of total hogs and 91.9% of the moving average daily purchases of index hogs. If the supply of non-index hogs is a bit tight, that may cause packers to sweeten their bids for index hogs. The kill this week is coming in very strong at +18.41% over the same period last year. Perhaps the new plants are the explanation. I suspect the new plants had some contracts in place to sell major parts of their production before they committed to building the plants.

There are plenty of moving parts to this hog pricing puzzle right now.

Ka!! Ching!! Two more long K/M spreads were just delivered off my boat at the profit target. The long K/M continues to treat me well but it really takes patience.

Best wishes,

dhm