8/14/18 was down -0.73 and the model projects the component on yesterday's kill will drop between -0.90 and -1.20. The VVVs settled discount to the component by -3.90. That is a small enough "Gap" to easily be closed by the falling Index. At the same time it seems to be saying that "The Market" is now expecting the index to stabilize at this level or slightly lower until the kill mushrooms in a couple of months.

Packers purchased 93.0% of the moving average daily purchases of total hogs and 93.7% on the index hogs. Hogs are moving quite well this week. With the 6-day moving average carcass weights running +1.28# heavier than one-year ago, I think producers are still a bit behind in their shipments. The higher kill so far this week may indicate that packers are now trying to get more current in processing hogs.

I'm still wanting to buy more summer contracts if we get a dip. If the Index gets down to 48.65 to match up with the ZZZs, we may see the summer contracts dip a little. If the Index takes a major hit and pushed the ZZZs below 40, the summer futures may dip a lot. I'm really not expecting the ZZZs to fall below 40 but it is possible. This market has me very cautious!

Best wishes,

dhm