8/28/18 was down -0.39 and the model projects the component on yesterday's kill will drop between -0.40 and -0.70. Packers keep shifting their kill around a bit and the model has missed on its projection the past couple of days but it keeps the direction of change correct. We keep seeing a new Hog Cycle low being set day-after-day. "The Market" is saying that we will hit the "Trough" before the VVVs expire. Pork production is high so it is going to take an improved "Demand" side of the equation to firm the CME Lean Hog Index.

I had not intended to trade the "Gap" the VVVs were running to the component but when the VVVs showed some weakness yesterday my itchy finger twitched and just like that I was short the VVVs. I don't think I will HODL them, but don't have sell orders yet.

With their lower bids, packers purchased 110.8% of the moving average of daily purchases on the total hogs and 93.3% on the index hogs. I think producers and packers are trying to keep current in processing hogs and that is good in this environment. Packers keep running some of their hogs in front of the non-packers and now have their carcass weights below the non-packer hogs.

Best wishes,

dhm