10/23/14 was down a more than expected -1.94 to 99.39. Packers are really focused on getting their cost of product down with the collapse of the cut out trade. Traders are voting and their vote is that packers are going to take another 10.86 off their bids by 12/14.

I have noticed that trader-consensus is not always right. In fact, it is almost always wrong and has to be corrected almost daily, if not hourly, as we move toward cash settlement.

My bias is that producers are going to have more hogs to ship than the last H&P report suggested and this will enable packers to push the index below the 88.55 where the ZZZs are now trading. I wouldn't be surprised to see the Index below 82 at cash settlement.

Am I betting the farm on this happening?

NNOOoooo ! !

But I am scalping from the short side, have a decidedly negative delta on some ZZZ options, have a couple of short ZZZs and have sold some Z/G spreads. So come 12/14/14 I think I will still have the farm but maybe with a small mortgage if the Index heads back to 130 where it was on 4-2-24.

The six-day moving average carcass weight moved up a bit to 214.77# which is +5.11# yr/yr. Both packer and non-packer hogs contributed to the heavier weight.

Best wishes,

dhm