7/16/18 was down -0.73 and the model projects that the component on yesterday's kill will drop between -0.45 and -0.75. This will be the other 50% of the cash settlement index. It appears there will be a little reward for those going to cash settlement short the NNNs.

With their lower bids packers purchased 85.7% of the moving average daily purchases of total hogs and 84.6% on the index hogs. With cutouts being weak, it is easy to understand that packers may not have been wanting a lot of pork to sell.

Tim, a few days ago you wondered how low the VVVs might go. There are a lot of us wondering the same thing. However much pork is produced, it will be sold and sometimes when the market is looking for the trough in the hog cycle, things get mighty bleak. I doubt very much that we will see a repeat of the 1998 wash-out. That year there was just not the slaughter capacity needed to process the hogs. This year with the new plants, slaughter capacity appears to be able to handle more hogs than producers have. At this point in time, the price of hogs would probably be much lower if there were not some new plants that are bidding for hogs to keep their operation going. As you know, one of the things that makes it difficult to project the "Trough" is the geopolitical turmoil that is going on. Frankly, I'm struggling to figure out how to trade this market. Your approach of buying puts may be as good as it gets.

Best wishes,

dhm