Hog Comments - Higher prices and hog cutout is still on fire.

CORN

Corn closed up .14 1/4 cents today after failing to trade below yesterday's low in either the overnight trade or the day session today.  The $5.36 area was the 50% retracement back to Tuesday's high in the market.  We closed above this level and then it became support for the balance of the day.  The market closed above the 62% level ($5.39) and if we can continue to hold I would expect a test of yesterday's high of $5.49 1/2.  I can see the market trading better tonight on follow through buying from today's session and then make an early high tomorrow before settling in.  Tomorrow is a risky day because it is Friday and how do most people want to be positioned going into the weekend, long or short?  We still need to close the market above a previous day's high in order for me to get excited about a reversal.  There has only been three days since July 1st, 2008 that the Dec '08 futures have closed above a previous days high.  Again keep upside protection on for feed needs as this could be the opportunity for the next year, who knows.  My position that I talk about lost .03 1/2 cents today.  It is frustrating because I had an order to get out yesterday and the market settled below my exit level (I should have been filled!!) but there seems to be no guarantees when the markets are trading fast.  The position that I added yesterday actually gained about .05 cents.

MEAL

Soybean meal looked like it was going to blow and go the way it traded early but then settled back into kind of a mediocre type trade today.  Well I guess the buy signal that I saw in the meal yesterday afternoon was good after all.  Again I didn't buy it down at $328 Sep but I did buy calls yesterday to make sure I take advantage of this wonderful gift of price depreciation.  Meal is holding support at $332.80 which would suggest that we should test the $343.40 high in the near future.  We need meal to close above a previous day's high for me to get excited about a trend change.  I am taking the same stance with meal as I am with corn, I am not convinced that we have turned any corner but the business side says we need to be covered in case the market moves higher.  I have found over the years that it is okay to have a bias to the market just don't be stupid.  It is a quote that I have hanging in my office, a little blunt but very true.  

HOGS

Hogs gave me my signal today, sell Oct '08 hogs at $77.15 stop.  The market moved through the highs yesterday and then came back down through them which triggered the sell signal.  If this signal is truly good we should see a violent move lower tomorrow or at a minimum Monday.  It is hard to think that we are going to be lower tomorrow when the cash market is ON FIRE!  Oct had a wild day of trade, first trading down as much as $.82 and then jumping up to $1.05 higher on the day with approximately 10 minutes to go and then it sold off to be up $.07.  Okay, I just saw the cutout this afternoon and WOW, up $2.09!!!!  This is unbelievable for this time of year.  I am still short hogs in Oct '08 and will stay short but I may be looking into buying some call options here.  Technically my signal is still good but it might not be for long tomorrow with these fundamentals.  One thing that seems odd to me is there's very little size on the buy side of the market after hours compared to the sell side.  I am confused but I still say protect what the market has given you.  Corn and meal are on the cheap end of the spectrum basis the last 9 months and hogs are on the high end, shouldn't pass these opportunities up.

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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08/07        73.3      91.96  111.09   97.52  74.05  98.60 89.59  99.72
Change :                2.09    3.99    1.63   3.51  -0.11  1.86   0.09

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 :  2.35 hgr   :  2.39 hgr   :  2.33 hgr   :  3.42 hgr

Negotiated      :             :             :             :

CARCASS BASIS   : 77.00-89.00 : 77.00-89.00 : 77.00-89.00 : 78.00-89.00

185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg

Plant Delivered :    85.84    :    86.88    :    86.67    :    84.26

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Head Count      :   36,559    :   19,771    :   23,670    :   12,675

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.