Hog Comments - 02-23-09 - A bunch of nothing in the Ag sector today.

CORN - March '09 Electronic
Open - $3.50, High - $3.59 3/4, Low - $3.49 1/2, Close - $3.51 3/4 Up $.01 1/2

I said on Friday that I had a buy signal for March '09 corn at $3.46 3/4 and the market needed to close above this level on Monday (today) for the signal to remain in tack.  As of right now the signal is still good but the market failed to honor the price action of the overnight trade.  I also said we are up against the $3.54 3/4 down trend line that is providing us with resistance and again today it held.

We saw a big drop in the Dow Jones going into the close of its trade today and should provide some pressure on tonight's commodities open.  I also said Friday the Dow Jones had buy signal at 7447 if the market could manage to get back to this level which it did not therefore the signal is null and void. 

Bottom line - I expect March '09 corn to open mixed to lower tonight testing $3.48 3/4 before finding some support.  If the market fails to hold $3.48 3/4 then the next target would be $3.42, our most recent low.  As aforementioned the buy signal is still intact but I would like the market to close above the down trend line at $3.52 before I get excited.  We made it through my projection points from Friday and I look for tonight/tomorrow to be sideways to lower and will probably take some direction from Wall Street.

MEAL - March '09 Electronic
Open - $269.90, High - $279.90, Low - $268.60, Close - $276.30 Up $6.30

March '09 meal was trading firmer most of the day with very little downside pressure.  The March '09 contract touched and went through my targets from Friday of $272.60 to $273.60 and I said I wouldn't hold my breath for $277.10 but we traded above it for an ultimate high of $279.90 and closed just below the resistance level.

I am moving to May '09 meal for commentary instead of the March contract due to its pending expiration.  When I look at the May '09 meal contract I begin to look for a bottom.  Today we got back above $270.70 which is the 62% retracement level back to our low on Dec 5th 2008.  If we continue to trade above $270.70 we should begin to make our way back higher with our first target at $295.30, $302.30 and ultimately $325.20.  I am not making this projection yet because my thoughts are conditional and I need confirmation first.

Bottom line - I look for support in the May '09 meal at $272.20 and resistance to be $276.70.  It looks like the meal market wants to make its bottom this week but like I said I need confirmation first.  I do like the setup we have so if you don't have meal covered or enough covered now is the time to purchase some coverage via a known risk strategy leaving your downside open.

HOGS - April '09 GLOBEX
Open - $58.125, High - $58.65, Low - $57.95, Close - $58.225 Up $.275

I said last Friday I thought we could test $59.05 and possibly $59.45 but we didn't get very close to these numbers today.  The prospects looked good when we opened but then settle down as we began trading for a few minutes.  We tested Friday's low today and got within $.05 of it and held which works for me.  The April '09 contract was very lackluster today and didn't give me any real direction other than a possible pause before making another stab lower.

On the hourly chart I see an intra-day buy signal at $58.05 with a risk management sell stop at $57.65.  I don't know as though I would make this trade because I didn't see anything on the daily chart that gives me great reason to do so.  I do see the cycle coming to a point where we could now see better trade for the remainder of the week but I like to focus more on price action and like I said it really didn't tell me much today.

Bottom line - I look for April '09 hogs to trade better this evening and mixed tomorrow with a potential test of $59.45 as I mentioned last Friday.  Cutout was down $.81 today and cash was considerably lower again today.  Packers are continuing to regain profit margin on a per pig basis with the cash market moving lower at a faster pace than cutout.  I look for support to be $57.90 tomorrow and if we break that level then we open ourselves up to another leg lower.  From a trading perspective I can see a bounce tomorrow but I still see nothing on the daily chart to get me excited about the prospect of a big rally.

NW_LS500
Des Moines, IA     Mon, Feb 23, 2009     USDA Market News

USDA NATIONAL CARLOT PORK REPORT as of:  3:00 P.M.
Purchases equated to FOB Omaha Basis.

Compared to Friday's Close:         Fresh loins 2.00-3.00 lower;
butts steady to 2.00 lower; sknd hams 17-23 lbs firm, 23-27 lbs steady; sdls
bellies 14-16 lbs steady to 2.00 lower; lean trimmings steady. Trading slow,
with mostly light demand and moderate offerings.



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Loads PORK CUTS          :              56.0
Loads TRIM/PROCESS PORK  :              16.0
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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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02/23        72.0      56.19   72.19   61.78  32.86  99.78 40.41  71.76
Change :               -0.81   -0.63   -0.94  -3.02  -0.06 -0.62  -0.50
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NW_LS831
Des Moines, IA     Mon, Feb 23, 2009     USDA-IA Dept of Ag Market News

National Direct Hog Price Comparison

--------------------------------------------------------------------------
                :  National   :    Iowa     :   Western   :   Eastern
                :             :  Minnesota  :  Cornbelt   :  Cornbelt
--------------------------------------------------------------------------
   Base Price is the price from which no discounts are subtracted and
   no premiums are added.
--------------------------------------------------------------------------
BARROWS & GILTS :  2.42 lwr   :  3.07 lwr   :  2.71 lwr   :  1.68 lwr
Negotiated      :             :             :             :
CARCASS BASIS   : 46.00-57.91 : 47.00-57.91 : 47.00-57.91 : 46.00-56.00
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    54.49    :    54.56    :    54.98    :    53.95
--------------------------------------------------------------------------
Head Count      :   20,892    :    7,104    :   10,973    :    9,919
==========================================================================

 

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.