CORN
Dec '08 corn opened relatively unchanged and then headed lower for a few minutes. By the end of the first hour of trade corn made a high of $4.18 which would have been $.16 1/2 higher. The first hour of trade was positive and suggested the market should close above the day session opening price of $4.02, which it did, closing at $4.03.
It is interesting to note that Crude was down during the entire day session for Dec '08 corn as well as the U.S. Dollar Index being higher. When corn made its rally it was doing it on its own and without help from the "outside" markets. This type of action is positive in the sense that the commodities may be breaking further away from outside forces. The only problem is when you have the outside market make huge historical moves it is hard for commodities not to follow in some fashion. FCStone released its November yield estimate for corn this afternoon and the number was 153.4 vs. 151.70 in October. The trade is expecting a larger corn yield so even though face value the increase looks negative I would call it neutral to mildly friendly.
Bottom line - I expect Dec '08 corn to open slightly lower tonight and sell off to find support. I look for support at $3.95 1/2 and then down to $3.92 3/4 if we even get this low. I am looking for early lows and late highs tonight and tomorrow. Commodity funds were buyers of approximately 3,000 contracts today and I expect follow through buying tomorrow. Resistance for tomorrow is $4.06 3/4, $4.09 1/2 and $4.18. I expect corn to firm as the day progresses tomorrow.
MEAL
Dec '08 meal was once again strong; it opened at $275.40 or $2.40 better than Friday's closing price. The first hour of trade was positive for Dec '08 meal but it failed to close above the opening price by $.20 which isn't a huge difference by any stretch. I mentioned last week Thursday that I would like to see the Dec '08 futures close above $277.90 if we were to see follow through buying this week. We didn't close above $277.90 so I am somewhat skeptical of a follow through rally this week.
I don't believe the market will tank, I am uncertain of its strength to make new highs above last week's which were $291.30. Resistance for this week will be $279.90 and $291.30; support will be $268.90 and $261.40.
Bottom line - I expect meal to open better this evening because of the FCStone crop survey having a soybean yield of 39.2 compared to last month's number of 39.4. This alone isn't wildly bullish but the market looked firm prior to its release and this looks like a good news item to pin positive trade on. I expect early lows and late highs during tonight and tomorrow's trade. It feels like $277.70 and $280.80 are viable targets for tonight/tomorrow. I expect meal to firm as the day progresses tomorrow.
HOGS
Dec '08 hogs still can't seem to get out of the downhill slide it is on, other than the fact we were only down $.40 today which is a minor victory when you look at it. I am still not friendly the Dec '08 contract because of cash prices and the outlook of the pork cutout. The Goldman roll will begin this week applying pressure on the Dec '08 and supporting the Feb '09 contracts. Even though the public knows that Goldman will be selling the Dec '08 and buying the Feb '09 contracts, they have an excellent way of getting their business done on their own terms and not allowing the market to move away from them too much.
If the Dec '08 contract trades higher tomorrow I see resistance at $55.35 and $56.05. I don't think we can get a lot higher than these levels tomorrow. I will continue to go with a lower call for tomorrow due to the lack of any fundamental news to get excited about. The U.S. Dollar Index was up again today and we all know that doesn't help matters any.
Bottom line - I expect Dec '08 hogs to trade both sides of unchanged tomorrow. We are oversold and we are due for a small correction, however, I feel the correction will be met with stiff resistance. We will have the Goldman roll that begins later in the week and runs through next week to contend with which should provide some resistance as well.
It is interesting to note that Crude was down during the entire day session for Dec '08 corn as well as the U.S. Dollar Index being higher. When corn made its rally it was doing it on its own and without help from the "outside" markets. This type of action is positive in the sense that the commodities may be breaking further away from outside forces. The only problem is when you have the outside market make huge historical moves it is hard for commodities not to follow in some fashion. FCStone released its November yield estimate for corn this afternoon and the number was 153.4 vs. 151.70 in October. The trade is expecting a larger corn yield so even though face value the increase looks negative I would call it neutral to mildly friendly.
Bottom line - I expect Dec '08 corn to open slightly lower tonight and sell off to find support. I look for support at $3.95 1/2 and then down to $3.92 3/4 if we even get this low. I am looking for early lows and late highs tonight and tomorrow. Commodity funds were buyers of approximately 3,000 contracts today and I expect follow through buying tomorrow. Resistance for tomorrow is $4.06 3/4, $4.09 1/2 and $4.18. I expect corn to firm as the day progresses tomorrow.
MEAL
Dec '08 meal was once again strong; it opened at $275.40 or $2.40 better than Friday's closing price. The first hour of trade was positive for Dec '08 meal but it failed to close above the opening price by $.20 which isn't a huge difference by any stretch. I mentioned last week Thursday that I would like to see the Dec '08 futures close above $277.90 if we were to see follow through buying this week. We didn't close above $277.90 so I am somewhat skeptical of a follow through rally this week.
I don't believe the market will tank, I am uncertain of its strength to make new highs above last week's which were $291.30. Resistance for this week will be $279.90 and $291.30; support will be $268.90 and $261.40.
Bottom line - I expect meal to open better this evening because of the FCStone crop survey having a soybean yield of 39.2 compared to last month's number of 39.4. This alone isn't wildly bullish but the market looked firm prior to its release and this looks like a good news item to pin positive trade on. I expect early lows and late highs during tonight and tomorrow's trade. It feels like $277.70 and $280.80 are viable targets for tonight/tomorrow. I expect meal to firm as the day progresses tomorrow.
HOGS
Dec '08 hogs still can't seem to get out of the downhill slide it is on, other than the fact we were only down $.40 today which is a minor victory when you look at it. I am still not friendly the Dec '08 contract because of cash prices and the outlook of the pork cutout. The Goldman roll will begin this week applying pressure on the Dec '08 and supporting the Feb '09 contracts. Even though the public knows that Goldman will be selling the Dec '08 and buying the Feb '09 contracts, they have an excellent way of getting their business done on their own terms and not allowing the market to move away from them too much.
If the Dec '08 contract trades higher tomorrow I see resistance at $55.35 and $56.05. I don't think we can get a lot higher than these levels tomorrow. I will continue to go with a lower call for tomorrow due to the lack of any fundamental news to get excited about. The U.S. Dollar Index was up again today and we all know that doesn't help matters any.
Bottom line - I expect Dec '08 hogs to trade both sides of unchanged tomorrow. We are oversold and we are due for a small correction, however, I feel the correction will be met with stiff resistance. We will have the Goldman roll that begins later in the week and runs through next week to contend with which should provide some resistance as well.
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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11/03 103.8 61.08 84.47 61.66 46.19 87.83 45.33 67.28
Change : -1.09 0.92 -3.51 0.01 -2.70 -2.34 -1.97
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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 : .49 lwr : .17 lwr : .03 hgr : .63 lwr
Negotiated : : : :
CARCASS BASIS : 45.50-58.00 : 45.50-58.00 : 45.50-58.00 : 46.50-56.08
185 lb Base Hog : wtd avg : wtd avg : wtd avg : wtd avg
Plant Delivered : 53.92 : 54.80 : 55.02 : 52.62
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Head Count : 25,875 : 10,630 : 13,784 : 11,577
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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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