8/6/19 was down -0.71 and the model projects the component on Tuesday's kill will drop between -0.40 and -0.70. The QQQs settled discount to the component by -6.66. The model calculates that the component will need to drop an average of -1.02/day to close that "Gap". So far the down trend does not seem to be that strong but packers can lower the hammer in a hurry if the supply of hogs are ample and their margins are tight. Their margins have been improving lately. The model calculates that Packers' margins are now $10.29 per hog. That is quite an improvement over the red ink they had a couple of weeks ago. I have no idea where packers break-even point is but I suspect they need a little more margin than they are now getting.

With their lower bids packers purchased 74.2% of the moving average daily purchases of total hogs and 80.4% on the Index hogs. Those are low numbers and I suspect packers were wanting to purchase more hogs yesterday afternoon. I also suspect producers were wanting to sell more than the packers were wanting to buy. That means I suspect the Purchase Index will fall further when the final numbers are released in the morning.

I keep reducing the load of 2020 futures I have piled on my boat and am relying more and more on the calendar spreads to pay the rent. The 2020 futures are doing a lot of damage to my margin. I may have to cut them all loose.

Best wishes,

Doc