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Thursday, August 14, 2008

Hog Comments - 08-14-08 Corn on the rise and hog are running in place.

IF THERE IS SOMETHING THAT YOU WOULD LIKE TO SEE IN THIS BLOG PLEASE EMAIL ME AND LET ME KNOW.  I WANT THIS INFORMATION TO BE OF VALUE TO YOU AND I WILL TRY MY BEST TO SEE THAT RESONABLE NEEDS/REQUESTS ARE MET.  MY EMAIL ADDRESS IS JKNUTSON@HURLEYANDASSOCIATES.COM 
CORN
Corn had a wild day today opening higher and then following soybeans lower for awhile.  It came roaring back in the later stages of the day to close higher by around .18 cents.  Its interesting to notice that the numbers I talked about last night held as resistance, the $5.80 imparticular.  $5.79 was our high today and the overnight has failed to penetrate this number.  The overnight trade did have a good opening for follow through to the upside but hasn't showed much enthusiasm thus far (7:10 p.m. cst).  Today's trade left me with a warning signal if you are long.  It isn't a sell signal by any means, its just a warning.  I would like to see the market close above $5.79 tomorrow but mainly above $5.64 1/2 for me to think we can see $6.24 as the next target.  
I would expect tomorrow to be another good day of trade however we could see both sides of unchanged again.  Tomorrow's close will give us an idea of how comfortable traders are going home over the weekend with long positions.  Again, I expect better trade tomorrow and further trending activity but am paying attention to a warning signal that I saw today.  I will keep you posted.  If we close the week up toward the weekly highs it will be the same type of market action that bottomed the market in March 2008.  This bottom is the one that started the entire rally that we saw this spring/summer.  We remain long corn via options for feed needs for approximately one years worth of needs.
 
MEAL
The Sep '08 soybean meal closed just below the $350 area that I talked about yesterday.  I am still going to stick with yesterday's comments of attempting a run at $381 IF we can close the Sep meal above $350 tomorrow going into the weekend.  Soybeans had a WILD day today being down almost .50 cents today and coming back to only close around a dime lower.  Tommorow will give use a taste of trader confidence to see how they want to be positioned going into the weekend.  Thus far the weekly chart looks friendly for now but again it is Thursday not Friday.  Friday is the day that we look at weekly charts to see if we like them or not!  I would expect some two sided trade from meal tomorrow but I feel as if we could rally into the close.  We remain long meal via call options for approximately one years worth of needs.
HOGS
Oct '08 hogs closed .15 cents lower today after being higher for a good part of the trade session.  Cash prices came in higher today as well as cutout but the futures market still seems to be iffy on whether or not it wants to rally or sell off.  The dollar continues its climb which will not be positive for exports if the rally continues for any great length of time.  We are in the early stages of a dollar rally.  I am still looking for a test of the $74.40-75.00 area sometime in the near future.  Again, I will decide what I will do to restructure my hedges at that time unless I see something prior to that that concerns me.  I would expect Oct '08 hogs to be weak tomorrow so I will continue to remain hedged for now.  I am not a long-term bear but I want to be cautious about the 4th quarter hog futures.


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
-----------------------------------------------------------------------
         Total                   Today's Primal Cutout Values
Date     Loads      Carcass    Loin    Butt   Pic     Rib   Ham  Belly
-----------------------------------------------------------------------
08/14        54.6      93.89  116.66  104.57  74.80 107.09 88.52  97.31
Change :                0.29   -0.24    1.67   0.54   0.72  0.34    unc
-----------------------------------------------------------------------
National Direct Hog Price Comparison

--------------------------------------------------------------------------
                :  National   :    Iowa     :   Western   :   Eastern
                :             :  Minnesota  :  Cornbelt   :  Cornbelt
--------------------------------------------------------------------------
   Base Price is the price from which no discounts are subtracted and
   no premiums are added.
--------------------------------------------------------------------------
BARROWS & GILTS :   .50 hgr   :  1.12 hgr   :  1.06 hgr   :   .81 lwr
Negotiated      :             :             :             :
CARCASS BASIS   : 76.00-88.50 : 78.00-88.50 : 78.00-88.50 : 76.00-86.49
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    85.91    :    86.76    :    86.71    :    84.17
--------------------------------------------------------------------------
Head Count      :   29,714    :   17,688    :   20,430    :    9,284
==========================================================================

Hurley & 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.

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