9/7/18 was up 1.24 and the model projects that the component on Friday's kill will be up between +0.55 and +0.85. With their higher bids packers were able to purchase 172.0% of the moving average daily purchases of total hogs and 169.9% on the INdex hogs. The VVVs are now trading premium to the component by 10.18. That is quite a "Gap" that the traders are expecting packers to close now that they have started chasing hogs.

Even though the Index seems to have bottomed out, it does not appear to me that there has been much liquidation of hogs by producers.

So the trough to this Hog Cycle may not have been hit but merely kicked down the road a ways but it is quite likely that the seasonality low has been posted by the index. I make that judgement call because the ZZZs are trading premium to the component by 10.96. If the ASF virus runs rampant in China, it may not be necessary to producers to suffer through a liquidation phase for this Hog Cycle but can continue expanding to meet the worldwide demand that could surface.

Still HODLing the summer futures. The dip today was not quite sufficient to tempt me to add more buy almost.

Best wishes,

dhm