10-23-14 was down again. This time by $2.14 and the model projects that the CME Index component on the 10-23-14 kill will fall between -1.45 and -1.75. The hog market is in a strong down trend.

The ZZZs are now trading at a discount of 12.00 to the index. If we get the nearly 2.00 drop in the component that the model is projecting, the discount may drop below 10.00. That is a more reasonable number to work with but still very wide.

The decline in carcass weights relative to last year suggests to me that producers are shipping hogs at a rapid clip. It looks like this weeks kill will be almost as large as the same week last year.

There are a couple of scenarios that may play out.

- If the USDA Report was correct, pulling hogs forward now may result in a shortage of down the road and we will see a fairly sharp rebound in hog prices following this period of aggressive selling by the producers, or

- Producers may have larger numbers of hogs than projected by the USDA and this high kill rate will persist throughout the fall kill and the CME Index will be pushed back down to last year's level of something like 80 to 82.

I's still short a couple of ZZZs and have tried a couple of scalping trades that have not worked for me today.

Best wishes,

dhm