Hog Comments - Corn blows through support, hog cutout on fire.

CORN
Corn was under pressure from the start this morning. We moved lower and held support at the number I talked about yesterday, $5.94 1/2. $5.94 3/4 was the actual price that the market bounced off of early. Once the soybeans started to weaken it was over. The flood gates were open. There was really nothing impressive about this market this week. The close below $6.00 and weather being on non-threatening side gives me little to be excited about. I would expect a test of the most recent low of $5.62 3/4 at some point next week. If Dec corn opens below today's low of $5.81 1/2 I would be cautious if selling it because that would be a friendly opening for a possible reversal. It's not a prediction just a statement. I still have my options position on that will keep me open to the downside but give me upside in this market if it rallies. I will be adjusting my position if we get another $.40 lower or so. If the market closes next week below $5.62 3/4 the next target would be around $5.13 Dec '08.

MEAL
Meal started off a little better today because soybeans were stronger than the overnight suggested and most of that was mainly a direct result of Crude Oil being up over $4.00 around the time of the market open. Corn struggled then beans followed and meal wasn't far behind. Meal was the strongest commodity (outside of wheat) from a price perspective today but couldn't hold any support going into the last 20 minutes of trade. It wasn't a great day for me in meal today, I had a stop order triggered near the open and then was stopped out of that position a little while later. I am still neutral on meal at this time but I am waiting to pounce when the market shows signs of turning. As of today's close it looks like we could be lower again on Monday and there is a gap down at $345.70 (CORRECTION $357.90 NOT $345.70 GAP AREA THIS CORRECTION IS AS OF 08-04-08)that we could possibly fill next week if this thing gets ugly.

HOGS
Hogs had an interesting day today, first they were up strong in the early trade but then all of a sudden it went from up $1.00+ to down $1.00+??? I am not sure what took place there but I entered back into my hedges a little below where we got out when the market didn't rally like I thought it should have. The market closed up $.27 for the day. Cutout was higher again today up $.67 and cash was higher again ranging from $.59 to $1.86. The cutout is at the highest level that it has ever been and continues to move higher. One would think with a close above $74.00 we could try for the old highs of $77.425 but man do I have other things telling me to be careful. I am in one of those modes where I am not sure what to think here. I am staying hedged for now because of what I talk about in the next paragraph as well as the tendencies I spoke of on my July 30th, 2008 posting.


CHART OF OCT 2007 HOGS click chart for a larger picture.
The chart to the left is of the Oct 2007 hog futures contract. The high for the move was on Aug 3rd, 2007 which happened to be a Friday. The market dropped $20.15 cwt from high to low in the matter of two months. I am not making a prediction because the situation between last year and this year are different but I just want to be reminded of what has happened in the past and how devastating it could be with $5.00 + corn this year!

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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08/01        44.0      88.90  104.68   93.67  70.52  94.85 88.02  99.49
Change :                0.67    3.29    1.31  -0.01  -1.45 -1.29    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 :  1.02 hgr   :  1.86 hgr   :  1.22 hgr   :   .59 hgr
Negotiated      :             :             :             :
CARCASS BASIS   : 74.00-83.99 : 74.72-83.99 : 74.00-83.99 : 74.50-83.00
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    80.31    :    81.34    :    80.95    :    79.23
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Head Count      :   25,178    :   11,385    :   15,792    :    9,386

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.