Dec '08 corn had a friendly opening last night by gaping lower than Fridays low and then moving higher. The Dow Jones helped to some extent today by trading 500 + points higher during most of the day session for the Ag commodities. $4.18 1/2 was 50% of Friday's trade range and provided resistance during todays trade. We need to close the market above $4.20 1/2 in order to make a run toward our most recent high of $4.42 1/2.
Bottom line - I expect Dec '08 corn to open mixed to higher tonight but my eyes are all on the Dow Jones for right now. The corn market isn't trading corn, it is still trading outside markets so it is tough to get a good feel for direction other than lower. I will go with higher calls tonight and then an early high in the day session tomorrow unless the Dow Jones continues to move higher.
MEAL
Dec '08 actually had a buy signal overnight when the market traded below $250.20 and then made a move higher. We made a low of $246.70 last night and a high of $263.80, of which neither were breached during the day session. The weekly chart on Dec '08 meal is showing warning signs of slowing in regards to our recent decline. Todays action wasn't too concerning one way or the other.
Dec '08 meal looks like it wants to trade higher tonight/tomorrow but we will see how the outside markets treat us. The Dow Jones had its largest single day rally in history with a 936 point jump today. I would expect the enthusiasm to follow through in the Ag commodities tonight. The Dow was only 400+ higher when the Ag markets closed today.
HOGS
Dec '08 made a charge right out of the gate today. There wasn't any major cash news to contend with that suggested a bullish environment but the US Dollar Index was heading south fast. The only problem with weaker Dollar is it was actually considerably higher on Friday so the drop today, although significant, it wasn't as much as if we were steady last Friday.
I liked the way hogs traded on Friday, grains and cattle were all down limit but Dec '08 hogs only closed around $1.00 lower. Impressive. The Dec '08 needs to close above $61.00 like it did today in order for me to think we could take another stab at $62.57. The selloff in the market later in the session looked to be profit-taking and would suggest another move higher toward todays high of $62.85.
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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10/13 50.8 68.53 90.95 69.89 48.94 91.61 56.59 75.87
Change : -0.05 0.69 -1.31 -0.18 0.81 -0.78 -0.11
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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 : 1.63 lwr : 2.00 lwr : 1.87 lwr : .84 lwr
Negotiated : : : :
CARCASS BASIS : 54.50-65.00 : 54.50-65.00 : 54.50-65.00 : 54.50-64.41
185 lb Base Hog : wtd avg : wtd avg : wtd avg : wtd avg
Plant Delivered : 61.48 : 61.97 : 62.08 : 60.73
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Head Count : 19,333 : 7,530 : 10,590 : 8,552
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