/1/18 was down -1.44 to 68.21. Yesterday's drop was somewhat larger than projected and that didn't surprise me because yesterday's drop was smaller than projected so I was quite sure packers were accumulating some less expensive hogs that would eventually come to market and they did yesterday. The QQQs are now trading discount to the component by -9.03. The model calculates that the component will need to drop an average of -1.06 per day for the next 9-days to close that "Gap". Over the past eight trading days the component has dropped an average -1.04 per day. It just might be that the QQQs are getting priced a bit too low but I am not yet ready to begin accumulating long QQQs to take to cash settlement. But I may get there if the QQQs drop much lower.

The six-day moving average carcass weight firmed to 208.04#. That is +1.11# yr/yr. Index hogs were also heavier at 208.17#. It smacks of hogs being backed up a little over the past week or so. During hot weather hogs should be getting lighter not heavier. Packer hogs were lighter than non-packer hogs by -0.07#. That is not much but it does confirm that packers really emptied their barns over the last month or so. Over the past 200-days packer hogs have made up 33.88% of the kill but for the past 6-days they have only been 31.44% of the kill. Packers know when it is time to get the hogs out of the barns!

Best wishes,

dhm