8/13/19 was down -0.72 to 79.51. That will be 50% of the cash settlement index for the QQQs. The QQQs closed at 79.425. The model calculates the component on today's kill will only need to drop -0.19 to close the "Gap". Packers seem to be lowering their bids more aggressively than that so I decided to go to cash settlement short a handful of QQQs. It won't be a big trade but I always like to test my wits against "The Market" when we go to cash settlement.

Over the past 6-days, packer hogs have made up 42.5% of the kill mix. One year ago it was in the 33% range. That represents a lot of vertical expansion by the packers.

The model calculates that packers now have their gross margins up to $19.38/hog. I think they can survive just fine with margins like that. Of course they always want more and in all likelihood they will get more as we move into the high fall kill period.

The six-day moving average carcass weight firmed to 208.02#. That is -0.22# yr/yr. Index hogs were a bit lighter at 208.01#. Packer hogs were lighter than non-packer hogs by -0.88#. Packers have done a great job getting very current in their shipments. This has me thinking that packers are planning on being able to buy hogs cheaper going forward so they are shipping their hogs while the prices are higher. If the Chinese start to get hungry for pork, the packers may be taken to school and they could be wishing they had pens full of heavier hogs.

Best wishes,

Doc