11/4/14 was down -$0.47 and the model projects that the CME Index component on the kill for 11-4-14 will drop between -0.60 and -0.90.

The gap between the Index component and the ZZZs has now closed to 0.87 so it won't take much to put the ZZZs premium to the Index. In fact if the ZZZs stay up a little and we get the full 0.90 drop in the component, we will be there at 11:00 this morning.

Last week the kill came in down 3.39% from the same week last year. That is close to projections from the H&P report. Yesterday the 6-day moving average carcass wt eased to 215.32#. That is 4.08# yr/yr. This just smacks of some producer liquidation of heavies. I continue to wonder if the H&P report was fairly accurate? If it was, we are going to see a little strength in the kill rate. With the cut outs struggling, packers may have to drop their bids a bit more as we move toward the ZZZs going to cash settlement.

I'm sticking with the short Z/G spreads. They have (and are treating) treated me well.

Best wishes,

dhm