7/1/19 was down -0.13 and the model projects the component on yesterday's kill will drop between -0.35 and -0.65. The model calculates that packers paid $0.65 per hog more than they were able to get for the pork and they still had to pay utilities, salaries, etc, etc. Not a winning combination and not likely to cause packers to bid higher until they get the price of cutouts up!!

The NNNs settled discount to the component by -1.90. The model calculates that the component needs to drop -0.20 per day to close that "Gap". Over the past seven-days the component has dropped an average of -0.52 per day. This may be suggesting that cutouts need to mount a rally before the CME Lean Hog Index will show much strength.

Over the past few trading sessions I had carefully considered these data points and concluded the environment was right to be short the NNNs. Well, it didn't work yesterday and so once again we see the correctness of Long Bear's observation, "In the hog market you can always expect the unexpected!"

Best wishes,

Doc