CORN
It's days like today that you just have to sit back, shake your head and laugh. It is interesting to see how the market can be so unsure of itself to trade these price extremes. As I said yesterday the market held resistance at $5.80 and I wanted to see the market close above $5.64 1/2 today in order for me to feel confident we would challenge the $6.24 recent high. That was all blown apart on the opening bell, corn dropped and never really looked back. We failed to close above the $5.64 1/2 level so what does that mean? It suggests that my warning signal was spot on yesterday (although it didn't say sell) as well as meaning the market could run down and touch $5.42 which is 50% of the way back to the recent low of $5.04 1/4. I am not impressed with the close we had for the week. The signal that was produced at $5.14ish on the weekly chart is still good and we NEED to be careful about getting to bearish with that signal hanging around. In order for this signal to be considered good we need to close above $5.14 this week which we did and also next week. The farther above $5.14 we are the stronger the signal. The market should have a strong rally if indeed this signal is good and so far it is. I am cautiously optimistic the corn market here and will continue to hold my long positions via options but if I see something that makes me concerned about being long I may neutralize my positions with futures at some point. Today's closing action would suggest for a lower trade Sunday/Monday and a possible test of the $5.42 area I spoke of earlier. I am keeping feed needs covered and if you aren't covered I would make sure to get coverage in place via options or small amounts of cash corn.
MEAL
Sep '08 meal was clobbered today along with the rest of the soybean and grain complex. The trade today like corn would suggest lower action on Sunday/Monday but the weekly chart left an interesting warning signal to the downside. It's saying be careful if you are short meal here as a reversal could be around the corner. Technically in the weekly chart we show the possibility of testing $292.00 but right now I have my eye on $317.60 if it's going to continue lower. We closed today below $338.00 which was 50% retracement back to our $317.60 low so the market may want to test the $317.60 area to see if there is more selling below that level. I am staying covered to the upside with call options for now. The commodities markets in general struggled today because of the outside pressure from Crude Oil dropping and the Dollar continuing to mount one of its largest rallies this year. The dollar is now at its highest level in 2008 and the highest level since December 2007. Crude has rallied about $1.00 since the ag markets closed today. The meal market is still close to the oversold side so if we don't make new lows below this weeks low of $317.60, we should try to make another rally attempt.
HOGS
Oct '08 hogs settled lower today but only after trading higher for a good portion of the day. The deferred months such as Dec '08 and the '09 contracts traded $1.00+ lower all day mainly based on corns action, especially for the '09 contracts. The weekly chart shows a complete denial of last weeks rally. With the dollar remaining strong and the failure of follow through trade to the upside in Oct '08 hogs this week, I am going to remain hedged. I will assess my positions if/when the market reaches the $74.40-$75.00 area. I am negative toward Oct '08 hog futures prices next week, we could see a retracement higher based on fundamental news and August contract expiration but I don't see the market as a major threat right now. The cutout remains in full force to the upside closing $.52 higher today and up $2.09 for the week. I would venture to guess that if the dollar continues its rally, the export business in hogs will suffer. Food for thought, the dollar is still on the cheap side of historical values.
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 ----------------------------------------------------------------------- 08/15 17.0 94.41 117.01 104.91 74.80 107.33 90.60 97.31 Change : 0.52 0.35 0.34 unc 0.24 2.07 unc -----------------------------------------------------------------------
NW_LS831
Des Moines, IA Fri, Aug 15, 2008 USDA-IA Dept of Ag Market News
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 : .65 lwr : .54 lwr : .52 lwr : .03 hgr
Negotiated : : : :
CARCASS BASIS : 78.00-89.00 : 78.00-89.00 : 78.00-89.00 : 82.00-87.00
185 lb Base Hog : wtd avg : wtd avg : wtd avg : wtd avg
Plant Delivered : 85.28 : 86.09 : 86.05 : 84.32
--------------------------------------------------------------------------
Head Count : 22,821 : 11,008 : 13,445 : 8,841
==========================================================================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.
Posts
No comments:
Post a Comment