8/28/19 was down -1.06 and the model projects the component on yesterday's kill will drop between -0.90 and -1.20. Looking at the way cutouts are falling, it will surely not be surprising for packers to want to lower their cost of pork.

With their lower bids yesterday, packers were able to purchase 89.3% of the moving average daily purchases of total hogs and 88.7% of the Index hogs. It appears that producers are quite willing sellers.

To my surprise, the VVVs have traded up more than a point this morning and are now up a half point. They are trading discount to the component by -8.25. The VVVs are trading discout to the ZZZs by -0.825. On average over the past eight years the VVVs have gone to cash settlement premium to the ZZZs by +6.89. In 2017 they went to cash settlement at a discount of -1.90 to the ZZZs. The V/Z spread can become mighty wild this time of the year. At this time last year it went from +3.325 to -4.175 in a matter of a couple of weeks only to rally to 12.00 at cash settlement. It's anybody's guess what it will do this year.

Best wishes,

Doc