CORN - May '09 Electronic
Open - $3.59 1/2, High - $3.63 1/4, Low - $3.54, Close - $3.63 Up $.02 1/4
First things first, if you will notice I shifted from March '09 corn to the May '09 contract. I said yesterday I thought we would see some support at $3.48 3/4 and if we violated that for a few hours then we could test yesterday's low of $3.42 but we only got as low as $3.45 1/4 before finding support. I also said I needed to see a close above $3.52 before I got excited about the market; we got that close today at $3.54 1/4.
I am still not super excited but I did add to my long feed position today buying the May '09 futures around $3.59 1/2, this was on 50% of what our needs are. I also have $3.50 May puts in place against my long futures in case I am wrong about the market. I purchased futures and puts instead of a call because if the market rallies like I think it could I can sell my put options and salvage some cost but if I had a call option in place I would have to pay the entire premium amount to keep my upside open.
Bottom line - Again I am switching to commentary about the May '09 contract instead of March. I am going with a firmer bias for tonight and tomorrow for various reasons, 1.) we closed above $3.61 1/4 which now projects $3.68 1/2 as a target and 2.) the stock market made most of its significant rally after the corn market was closed. As mentioned I think we will be firmer tonight/tomorrow unless President Obama says something the market doesn't like in his State of the "Economy" Address this evening. Resistance is $3.62 3/4 and then $3.68 1/2 which I think we will touch. Support is $3.61 1/4 to $3.59 1/2, we may touch $3.61 1/4 but assuming no surprises from the President tonight I think the first support level will hold. I believe corn is searching for a bottom and I am taking a more aggressive approach to protecting upside price risk on feed needs. We still need to get back above $3.63 1/4 and close there on a Friday if we want to show further signs of a bottom.
MEAL - May '09 Electronic
Open - $272.20, High - $275.00, Low - $269.50, Close - $275.00 Up $1.70
As mentioned in corn I am now referring to the May '09 meal contract instead of the March because of pending expiration. As a review from yesterday I said; 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. Today's close was at $275.00 which once again is above my key area of $270.70. I failed to mention another area of resistance when I gave targets yesterday and its $281.20 basis the May '09 contract.
The $281.20 area is the 50% level between the Dec '08 low and the Jan '09 high so we need trade above this level for a day or two before I feel very comfortable saying $295.30 is our next target. I still feel like soybean meal is trying to bottom this week but like I said yesterday I need confirmation first and I don't have it yet.
Bottom line - With the Dow Jones rallying into its close today I believe it will bring support to the grain markets tonight therefore I look for meal to open higher tonight. There is one thing I don't like on the hourly chart (very short-term) is if we gap higher tonight and retreat there is a small sell signal at $274.50 on a sell stop with the risk management buy stop above the most recent high. I WILL NOT take this trade tonight because of all the other longer-term indications I get of a potential bottom. Resistance for tomorrow is $276.70 and then $281.20 and support will be $272.30 to $271.60. I believe we will have an early low and a late high tomorrow.
HOGS - April '09 GLOBEX
Open - $57.60, High - $57.95, Low - $56.875, Close - $57.70 Down $.525
Flat out called hogs wrong today on support and resistance targets. I mentioned yesterday there was a buy signal on the intra-day charts at $58.05 but I wouldn't take that trade because the daily charts were so lackluster, this was a good thing today. There is really nothing good to talk about on the fundamental side from a short-term perspective, cash remains weak and we can't seem to light a fire under the cutout.
April '09 hogs actually had good price action today if you are looking for signs of a potential reversal in the market. I have a cycle indicator that says yesterday we were near the bottom of the cycle and today's price action confirms that to me BUT I need to see good buying above today's high of $57.95 and a close above this level tomorrow. A close tomorrow above $70.425 in the June '09 contract would also be beneficial for the prospect of a rally in that contract. When I talk about reversals and rallies I am looking at a shorter-term basis and not calling market bottoms because we need much more confirmation than what we have right now. The information I am giving you on the April and June '09 contracts are just a conditional setup right now.
Bottom line - The cutout was down $.17 tonight which is better than yesterday's number of down $.81 but we can't get around the fact that it is still lower. It sounds like most packers are out of the market for buying pigs this week (at the moment) to continue pressuring the cash market looking to increase the demand for product/cutout. Today is confusing because we have a bunch of bearish fundamental news out there but the charts are showing signs of a possible change in direction. I am a technician so I will go with what I objectively see in the charts. I see support for tomorrow at $57.40 and then $57.25 and resistance above the market is $57.95 and if we manage to sustain trade above $57.95 we should trigger some buy stops to cover some short positions AND it is a buy signal on my chart. IF this buy signal is good and starts a rally over the coming week(s) our next upside target would be $60.475. I wouldn't get aggressive with this signal because of the fundamental situation we are in but I want to talk about it so you know it is there. The way I am handling risk of a potential reversal is using puts to protect downside risk. I'm looking for pressure early and then stabilization as the day progresses.
NW_LS500
Des Moines, IA Tue, Feb 24, 2009 USDA Market News
USDA NATIONAL CARLOT PORK REPORT as of: 3:00 P.M.
Purchases equated to FOB Omaha Basis.
Compared to Monday's Close: Fresh loins weak to 2.00 lower;
butts 1.00-2.00 lower; sknd hams 17-20 lbs steady, 20-23 lbs steady to 1.00
lower, 23-27 lbs steady to 2.00 higher; sdls bellies steady to 2.00 lower; lean
trimmings steady to 2.00 lower. Trading slow to moderate, with mostly light
demand and moderate to heavy offerings.
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Loads PORK CUTS : 125.75
Loads TRIM/PROCESS PORK : 11.0
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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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02/24 136.8 56.02 71.03 60.10 36.40 98.15 40.66 71.27
Change : -0.17 -1.17 -1.68 3.54 -1.63 0.25 -0.49
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THE USDA AFTERNOON CASH REPORT WAS NOT AVAILABLE AT THE TIME OF THIS POST.
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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