9/17/19 was down again and the model projects the component on Tuesday's kill will drift down between -0.75 and -1.05. Cutouts dropped -0.45 and packers' gross margins on Index hogs were steady at $23.46/hog. By nudging their cost of pork down, packers were able to maintain their margins but dooms day may be at hand for producers of Index hogs. Packers seem to be willing to expand their production to take up the slack.

The VVVs settled premium to the component by 5.04. The fact that the index will most likely move lower does not bode well for the VVVs after all we are still in the chase for the seasonality low in the CME Lean Hog Index and the most common time for that to occur is when the ZZZ go to cash settlement. World pork supply IS headed lower and that is translating into escalating pork prices in China and undoubtedly eventually it will happen in the USA. Bur first we have to get the export traffic flowing. All indications are that it is going to happen. The question is, "Will it be in time to save the VVVs?"

Maybe - but probably not this week. If there is a pop in the VVVs on Wednesday, I think I will sell a couple.

With their lower bids packers purchased 88.7% of the daily moving average purchases of total hogs and 94.4% on total hogs.

Bes wishes,

Doc