8/7/19 was down -0.14 and the model projects the component on Wednesday's kill will drop between -0.30 and -0.60. The QQQs settled discount to the component by *5.41. The model calculates the component will need to drop an average of -0.97 per day to close that "Gap". Over the past three days the component has dropped an average of +0.56 per day. The rate that packers are cutting their bids does not seem to be sufficient to drop the component -0.97 so I am planning on holding some long QQQs for cash settlement.

Cutouts showed a little weakness Wednesday dropping -0.33. That was not enough to keep packers' margins from rallying a little. The model now projects they moved up to $10.84 per hog.

By the time the afternoon reports were released, the lower packer bids had been sufficient to entice producers to sell 102.4% of the moving average daily purchases of total hogs and 106.0% on the index hogs. I think this means producers are quite willing sellers.

Best wishes,

Doc