Hog Comments - Feed tanks as hogs stay neutral to up.

CORN
I don't know if I can shed much light on what took place today other than wow. It sounds as if a large hedge fund decided they were going to exit the commodities (per CNBC) and there was a general sell off in most commodities markets especially the grains. I said last Friday that I thought we would test the most recent low of $5.62 3/4 but I didn't think it was going to come out and do it today!! Now that we have violated this area of support and closed the market 1/2 cent off the lows I would expect the $5.62 3/4 area to now be resistance. Here is the neat part about reading charts, you can usually find something if you look hard enough. I do see that we have a potential buy signal in Dec '08 corn at $5.62 for which I would put a buy stop at $5.63 or so if I was going to make the trade. I am not sold on this market bouncing just yet, there is just a lack of bullish news out there. I would also have a buy signal if the market opens lower than $5.55 in the Dec contract tonight, trades lower and then trades back higher (above $5.55). I would have a buy signal at $5.56 with a sell stop below the low of the trade at the time you get long. Confused? I am. It is hard to write this stuff out because it is conditional. I wouldn't recommend either of these buys right now because I feel $5.13-.15 is target area for corn. My feed corn position actually gained .01 3/8 today reducing the cost of my position. I put this position on when the Sept futures were trading around $6.30 and I have a cost of approximately $.13 3/4 if I would have liquidated it on the close today. That is giving up 14.5% of the $1.00 move to the downside and we shoot for 25% or less if possible. This position should continue to reduce in cost if the market continues to move lower and I will readjust to give me upside protection from current levels without using futures. My feeling is for the market to gap lower tonight and fill its gap prior to tomorrows open, I have a funny feeling that tomorrow could be another ugly day although I don't think a limit move is in the cards. It is a risk to say this when I have two potential buy signals but when people want to liquidate positions it will be tough to sustain rallies. A private analyst gives the U.S. corn crop a 154.5 bu/ac yield where the USDA's last estimate was 148.4. The trade has been using 152+ as its number recently so this number should be viewed as bearish.

MEAL
Meal opened softer and then tanked when crude went from trading $1.00 higher to $5.00 lower. I apologize for the wrong price level on the meal gap in Friday's comments. I said the gap was at $345.70 when it was actually at $357.90. I apologize for the misinformation. We are currently at the 62% retracement level that goes back to the April low of $292.00. The level we closed at today could be a level of support although I am not sure I would agree at this point. I am taking the wait and see/give me confirmation role with this market. I said I didn't have a great day in the meal market last Friday but it turns out discipline to a system is something that one needs to keep them out of trouble or "wishing" the market in a direction. That discipline saved me from being in the market for this nice $20.00 move lower today! The next level of support is $$327.90 and then down to the April low of $292.00. I feel the market can make another move lower tomorrow but it has the same buy characteristics as corn does tonight with a gap lower (below $348.40 Sep) open and then trade higher. Basically any lower open in meal is a gap lower. I am still on the defensive with meal but want to get long as soon as I see something that changes my mind. This is an excellent opportunity to lower our feed costs for the year and beyond if we choose to take it.

HOGS
Hogs really had a quiet day today. We opened higher which happened to be the high for the day in the pit just to proceed lower and close up $.32. I still have technical warning signals if one is un-hedged, the problem is we continue to hold the $74.00 62% retracement level back to our old highs. I am still torn but I know what happened last year when the market decided to take its tumble and the rumors of hedge funds "getting out of commodities" today makes me think being safe and margin a couple dollars is better than being sorry if the market drops a bunch. According to the USDA tonight the cash market was pretty strong and the cutout was only up $.11 on the day and still posting new highs. I don't have much to say about hogs other than I don't like the charts, they are giving me warning signals (if one is un-hedged) but no good sell signals to hang my hat on. When one is unclear of direction I guess sticking to business and making sure one is covered is probably the best solution. I would expect hogs to be sideways tomorrow but leaning toward lower if I had to lean that is.

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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08/04        36.8      89.01  104.91   93.42  70.73  95.16 88.13  99.55
Change :                0.11    0.24   -0.24   0.21   0.31  0.11   0.06

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 :  1.43 hgr   :  1.32 hgr   :  1.68 hgr   :   .80 hgr
Negotiated      :             :             :             :
CARCASS BASIS   : 70.50-85.00 : 70.50-85.00 : 70.50-85.00 : 76.00-83.11
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    81.70    :    82.54    :    82.54    :    79.90
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Head Count      :   22,878    :   11,937    :   15,436    :    7,185

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.