NOTICE: Over the next few weeks I will be working on a way to get better quote information on this blog. The one that we have now is end of day data only so it doesn't update during the day and is quite useless in my opinion. Hopefully I can get something figured out to make the quotes more useful.
CORN
I said yesterday that I thought the market would move higher early and then drift as the day went on. Well, that action happened overnight and this morning we moved lower and eventually traded higher. If you will notice in the chart to the left, we have failed to close the market above the $6.22 level that I spoke of as resistance. Today's candle (today's trade action) left us with a warning signal. I see two things, 1.) we gaped higher than yesterday's high last night, 2.) we had a relatively wide trade range today and closed slightly above last nights open. To me these are both warning signs that the market may be looking for a breather PLUS we are at the 25% retracement level at $6.22. Looking at the 6-10 & 8-14 day forecast it isn't very threatening, above average temps but also normal/above normal rainfall and rain makes grain when it comes to the markets. I am becoming less and less friendly to this corn market. A good rule of thumb would be look for the first day the we close below a previous day's low and then we could turn the market lower. I am not bullish right here BUT the market has reversed itself and has been moving slightly higher therefore I will wait for something to jump out at me to say it is over and I don't see it yet. I don't believe the market is super bullish here, I have three warning signals today that say use caution on the long side of the market. Here is the kicker, they are warning signals not sell signals. Closing this Friday above $6.29 (last weeks high) could give the market enough incentive to try for the $6.53 area. I am in one of those areas right now where I don't have a strong conviction that the market is going to reverse lower but I have my finger on the trigger because I don't feel the long-term bull just yet. I am not saying it wont get here someday, I just don't know if now is the time. I feel we are just recovering from the downside going into the Aug crop report. Gun to my head, I don't see us closing above $6.29 this week. The overnight market is currently unchanged as I write this.
MEAL
Meal had a better day today than I thought it would. It struggled early with soybeans but by the end of the day we were trading higher. $377.40 is the 50% retracement level back to last weeks highs in meal and we failed to close above this price today. If we fail to close above $377.40 on Friday then I feel that we could make a move back towards our lows and try to challenge them. I am just not overly opptomistic in meal (soybeans really) right now. It doesn't mean that I don't think protection is needed to ward off higher prices but I don't feel one needs to be aggressively long right now. Stay covered, I think we could be lower tomorrow and I think we will have a better place to get aggressively long below current market levels.
HOGS
Hogs had a pretty nice rally today but failed to hold it going into the close. We need to close the week above $72.95 for mee to think we could make a run back up to $74.52 although I don't see us getting there at this point. I feel like we could see the hog market slightly lower tomorrow even with the good cutout numbers that we have today. Cash was a bit weaker but nothing to bad and cutout held its own up $.77. Oct hogs typically rally into the end of July and trade lower for the first half of August. The largest rally that we have had from Aug 1st to Aug 15th has been $3.28 cwt in 2006, the largest decline was $5.99 in 2007. This information is based on the closing price on Aug 1st and the closing price on Aug 15th and the records that I am using are going back to 1993. Keep in mind that in years where the Oct futures are above $65.00 on Aug 1st, 1997 @ $75.57, 2004 @ $69.22 and 2007 @ $74.57 the market dropped each year by $4.55, $.90 and $5.99 respectively. This is a good indication that Oct hog futures are usually very well priced at $70.00+.
USDA ESTIMATED PORK CARCASS CUTOUTHurley & Associates believes positions are unique to each person’s risk bearing ability; marketing strategy; and crop conditions, therefore we give no blanket recommendations. The risk of loss in trading commodities can be substantial, therefore, carefully consider whether such trading is suitable for you in light of your financial condition. NFA Rules require us to advise you that past performance is not indicative of future results, and there is no guarantee that your trading experience will be similar to the past performance.
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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07/30 79.1 86.64 101.73 91.05 69.54 95.60 86.90 94.50
Change : 0.77 1.61 0.25 1.37 -0.55 0.72 unc
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 : .55 lwr : .39 lwr : .61 lwr : .46 lwr
Negotiated : : : :
CARCASS BASIS : 71.75-81.84 : 73.00-81.84 : 73.00-81.84 : 71.75-81.47
185 lb Base Hog : wtd avg : wtd avg : wtd avg : wtd avg
Plant Delivered : 78.93 : 79.57 : 79.46 : 77.53
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Head Count : 25,184 : 14,875 : 18,316 : 6,868
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