Hog Comments - Oct hogs take it on the chin.

CORN
If you are having a hard time viewing the charts that I post, all you have to do is click on them to make them larger. Corn FINALLY closed a day above the previous days high which was $6.10 on yesterday's Dec '08 corn close. I am still staying with my thoughts from yesterday that I believe that any rallies we get the market should be met with selling. The numbers I gave yesterday are $6.22, $6.53 and $6.81 all in the Dec '08 contract. The market settled today at $6.13 1/2 and I would expect some buy stops to be triggered tonight and have the market up harder early tonight rather than later. We are not far away from my first target of $6.22 and it sounds as though the Government will not allow CRP acres to come out early this year (released at 1:45 p.m. central time). This news is viewed as bullish but I look at it as big whoop, this story is just something to stick a price rally to. The market is/was severely oversold and needed a recovery. I expect the markets to open better tonight and trade better through tomorrow but again I would expect to see resistance at $6.22 if we can get that high. My strongest resistance number is $6.80 in the Dec '08 contract, that is 50% retracement back to the $7.99 1/4 high we had in late June. Keep protecting feed needs in here!

MEAL
Meal broke early with soybeans and corn for that matter early this morning but mounded a little comeback toward the end of the day. Soybeans and wheat were the weakest link today by far, then meal and finally corn as the leader. I bought meal in Sep when it was down approximately $1.80 and sold it off around up $1.80. I had orders in to sell up at $375.00 but of course the market topped at $374.80, lucky me. I still don't think meal has major upside potential at this point but I don't think it is going to fall out of bed either. I believe meal is going to establish a range and trade within it until the crop report in August. Corn and soybeans feel as if they should be in the same boat. I expect early highs in meal tomorrow (or tonight) and then drift lower as the day proceeds. Again, I will look to buy dips in meal and I will also get long if the market acts in a way that isn't in line with the movement I expect. Keep protecting the upside in meal.

HOGS
Hogs took it on the chin today! The Oct contract was $2.00 lower at one point during the day but managed to rally back and close down $1.10 on the day. Oct '08 hogs touched its 50% retracement level of $71.35 today and bounced off of it. I would expect today's low to be support tomorrow. The market should test this low again to see if it will hold and if it doesn't then we could see $70.65 and then down to the low of $68.25. $72.45 should provide as resistance tomorrow but if we can continually trade above it tomorrow then we try to get up to today's high of $73.75. My feeling is still heavy on the hog market, I think we are living on borrowed time in the cash market. Again as I have said several times this past week; August 4th was the top of last years rally and then it was all downhill from there. I am not making that prediction as much as I am keeping it in mind. I expect a test of today's lows tomorrow.

USDA ESTIMATED PORK CARCASS CUTOUT
Based on FOB Omaha carlot pork prices and industry yields.

          Calculations for a 200 lb Pork Carcass
       53-54% lean, 0.65"-0.80" backfat at last rib
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        Total                   Today's Primal Cutout Values
Date     Loads      Carcass    Loin    Butt   Pic     Rib   Ham  Belly
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07/29        74.9      85.87  100.12   90.80  68.16  96.15 86.18  94.50
Change :                0.57   -0.41    0.11  -0.04  -0.87 -0.16   4.93

National Direct Hog Price Comparison

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               :  National   :    Iowa     :   Western   :   Eastern
               :             :  Minnesota  :  Cornbelt   :  Cornbelt
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  Base Price is the price from which no discounts are subtracted and
  no premiums are added.
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BARROWS & GILTS :   .53 lwr   :   .65 lwr   :   .75 lwr   :   .23 lwr
Negotiated      :             :             :             :
CARCASS BASIS   : 72.25-82.10 : 73.00-82.10 : 73.00-82.10 : 72.25-80.00
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    79.41    :    79.90    :    80.00    :    77.93

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