Hog Comments - 03-10-09 - Price weakness continues in hogs.

CORN - May '09 Electronic
Open - $3.64 1/2, High - $3.84, Low - $3.64 1/4, Close - $3.75 1/2 Up $.10

I said yesterday "I am looking for May '09 corn to open unchanged to lower tonight based on follow through from the close today.  I see support at $3.64, $3.62 1/2 and then $3.58, I see resistance at $3.67 then $3.70.  I am expecting early follow through weakness tonight and MAYBE tomorrow morning but I am looking for an early low and a late high tomorrow.  We need a close above $3.68 to gain more strength for a run at the upside but for now I believe selling will surface just below today's low."

My first level support point was almost right on today but I was only off on resistance by $.14!  I expected to see a small correction before we made a move like we had today but obviously that wasn't the case.  The stock market helped get things going this morning because Citibank stated it had a profitable first two months of 2009 which is the best they've had since the third quarter of 2007; Wells Fargo made a similar comment last Friday.  This got stocks moving higher in pre-market and then the Government stated they would bring back the "up tick rule" in the stock market which sent the Dow Jones above 300 points higher.  They also made a comment that they will review mark to market accounting.

Bottom line - I am still looking for a place to buy May '09 corn against $3.60 put options as the market didn't get to my target levels over the past couple of days.  We have now traded substantially above the downtrend line in the May '09 contract and I look for a close above $3.68 for a couple of days before getting extremely excited about a major rally.  Support for tomorrow is $3.74 $3.71 3/4, $3.69 and resistance should be $3.81 1/4 and then $3.84.  The market created a sell signal at $3.79 1/2 in the May '09 contract today with a protective buy stop at $3.85. 

MEAL - May '09 Electronic
Open - $265.00, High - $273.90, Low - $264.40, Close - $271.30 Up $6.30

Reviewing yesterday's comments I said " I am looking for an early low and late high tomorrow with support at $264.50 and $263.10 and resistance to be $267.50 and $270.50.  I am still in the camp of soybean meal looking for a bottom therefore I have call options in place to give us upside protection in the event of a rally.  I want upside protection at these levels but I want known risk thus the use of options."

I was very close with my first level of support in May '09 meal but like corn I was off on my resistance number but not near as bad as I was in corn.  I have been saying I am looking for the market to bottom in here but we have failed to get any type of rally going that is sustainable.  Today we closed above a key level of resistance of $270.50 which is the 62% retracement level back to the contract low.  A close above this level looks positive but we need more than just one, I would like to see follow through to the upside tomorrow and another close above $270.50 before I get very excited about rally attempts.

Bottom line - I am looking for tonight/tomorrow's trade to open on weaker tone and test support at $269.20 to $268.00 before finding support.  As I said above we need to see the market continue to close above $270.50 before I think we can make a bigger move higher.  If you don't have upside protection in place I would make sure you visit with someone who can help you with this need.  Support for tomorrow is $269.20, $268.00 then $264.40 and resistance is $272.30 and $273.90. 

 

 

HOGS - June '09 GLOBEX
Open - $73.00, High - $73.25, Low - $71.60, Close - $71.70 Down $1.50

As a review from yesterday I said "I am looking for the June '09 hogs to test $72.37 with an ultimate test of $71.90.  If we close below $71.90 for a couple of days then I would expect a test of $71.30 to $69.55 area.  I see June '09 trading lower tomorrow in the early stages of the day and possibly finding support later in the session however I think any rally we have tomorrow will be sold by professional traders.  I don't like the market here unless we start to see big moves to the upside in the cutout numbers.  Support for tomorrow is $72.37 and $71.90 where resistance is at $73.60, $73.77 and then $74.30 although I don't think it is likely we will see the topside of resistance tomorrow.  Today looked pretty ugly on the charts (in my opinion)."

Not much has changed from what I said yesterday or late last week, I am not short-term friendly June '09 hogs at these prices until something significant changes with cutout.  Packer margins are still in the red and it business principles would suggest you can't slaughter hogs at a loss for an extended period of time, something has to give.  Again, my decisions are based on chart action with followed by an awareness of fundamental information so I am more concerned with the way the chart looks than anything.

Bottom line - I am looking for continued downside tomorrow with pressure more than likely mounting.  We closed below my support area of $71.90 today and if we continue to close below it we should test $69.525 in short order.  If we test and close below $69.52 then ouch, another leg lower is possible.  Support for tomorrow is $71.35 then $69.525 and resistance is $72.425 then $72.62 then today's high of $73.25.  I expect a weak day of trade tomorrow with the majority of negativity coming early in the day as the charts look like we could find support later in the session. 

I had to post these comments prior to the cash and cutout information release by the USDA this afternoon, my apologies.  Below are the links to the USDA site to get this information.

Pork Cutout  

USDA Hog Price Comparison

 

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.

Hog Comments - 03-03-09 - Hogs find support and rebound.

CORN - May '09 Electronic
Open - $3.49, High - $3.54 1/4, Low - $3.47 1/4 Close - $3.50 1/2 Up $.00 1/4

As a review of yesterday is said "I think it is safe to say we should see a test of today's low of $3.44 1/2 and then attempt to rally toward $3.50 3/4.  Support for tomorrow in the May '09 contract is $3.44 1/2 then small support at $3.37 1/2 and resistance should be $3.50 3/4 then $3.52 1/4.  I am looking for some turn around Tuesday action tomorrow."

The May '09 contract made it through the $3.52 1/4 upside resistance level I had penciled in for today and it was .02 3/4 above my support level of $3.44 1/2.  I wish I had some magical news or chart formations to talk about today but I really don't.  Today was pretty boring when it comes to the market, the Feds have been speaking in Washington D.C. all day and that has the Dow Jones both up and down depending on the comments that are being made.  We did have an inside day today meaning today's low and high were both within yesterday's trade range.  

Bottom line - I feel like we should continue to try and move higher tomorrow as we got very little of that accomplished today.  I see today's high of $3.54 1/4 as a target area for tomorrow and then $3.58 in the May '09 contract.  Overall I think we could be mixed tomorrow with the upside resistance areas being targets.  Tomorrow's support is $3.48 1/4, $3.47 1/4 then $3.44 1/2.  Tomorrow's resistance is $3.54 1/4 and then $3.57 1/4.  I look for mixed to better trade tomorrow.

MEAL - May '09 Electronic
Open - $260.50, High - $265.70, Low - $259.90, Close - $264.70 Up $3.90

Yesterday I said "I see tomorrow having an early low and a late high looking for a turnaround Tuesday type action.  Support is $259.50 then $255.30 and resistance is $263.90 then $265.20.  I am looking for an early low and late high tomorrow but it all depends on how the Dow Jones reacts tomorrow."  

My support and resistance points for today were relatively close to the mark, we were within $.40 on support and $.50 on the resistance side.  The May '09 meal contract is still below the $265.20 level that would provide a test toward $270.90 if we managed to close above this level for a couple days.  .

Bottom line - The market looks like we should have follow through to the upside tomorrow based on the way we traded today.  I see support at $262.90, $262.20 and then $260.00 if we get moving to the downside.  Resistance should be around $263.90 and then $265.70.  One note to point out is if the May contract moves above $265.70 and then comes back down through it will trigger a sell signal at $265.20 on a stop.  If the sold at $265.20 then a risk management buy stop order should be placed $1.00 above the most recent high.  This is an observation not a recommendation

HOGS - April '09 GLOBEX
Open - $60.00, High - $61.325, Low - $60.00, Close - $60.85 Down $.575

Reviewing yesterday's comments I said "I expect some recovery for the hog sector tomorrow along with the grains with projections of early lows and late highs.  April '09 support for tomorrow is $59.825 then $59.55 and if we get bearish then $58.60, resistance is at $60.45 then $61.075-$61.275.  June '09 support is $71.175 then $70.825 while resistance should be $71.925-$72.125 then $72.75.  I don't think the high end of my resistance levels for either April '09 or June '09 is attainable tomorrow unless we get major rallies in other markets."

We got within $.20 of my first support level in April '09 and $.05 above my resistance level.  In June '09 we got within $.175 of my first support level and within $.30 of my last resistance level.  There was very little in the way of news today from a fundamental perspective.  The market traded technically today as illustrated by my support and resistance points from yesterday.

Bottom line - We got a market close back above the $60.45 level which will open the door to a longer-term target of $64.00 provided the April '09 contract continues to close above $60.45.  I am looking for mixed markets tomorrow but with a friendly feel, I can see both directions tomorrow.  April '09 support is $60.65, 60.32 and resistance is 60.975, $61.32 then up to $64.00 (outside of limit range but is the next resistance level).  June '09 support is $71.35, $71.125 and resistance is $72.12, $72.45 then $72.75.

I have an appointment this afternoon therefore I will not have any USDA information today.

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.

Hog Comments - 03-02-09 - Hogs take a break from the recent rally.

CORN - May '09 Electronic
Open - $3.57 1/4, High - $3.62 3/4, Low - $3.44 1/2 Close - $3.50 1/4 Down $.08 3/4

May '09 corn did what everything else was doing today, moving lower.  I had support last week at $3.59 1/4 where I purchased futures ($3.60 actually) against $3.60 May'09 call options to get further coverage in place after taking some equity out of the market the day before.  I have around 25% exposure to the downside that has unknown risk however all of my other positions have a know risk factor.

As I watched the May '09 corn contract sink lower and lower today it did find some support around $3.45 1/2.  The market made its big move during the first hour of trade then had $.01 1/2 worth of follow through to the downside during the second hour and the third hour was looking for a retracement of the earlier downside move.  It is hard to have a friendly tone to the market now that we have pierced the $3.50 1/2 support level in the May '09 contract.  Last Friday's close below $3.63 wasn't the best Weekly close we could've had.  A close below $3.63 on a consistent basis would project another test of the contract low of $3.15 3/4 set on 12-05-08.  

Bottom line - today's action is piggy backed on the decline of the Dow Jones making its lowest low since 1997 by the help of our friends at AIG needing more taxpayer money.  The Dow Jones aside I am looking for an early low tomorrow and firm as we move forward into the day.  I think it is safe to say we should see a test of today's low of $3.44 1/2 and then attempt to rally toward $3.50 3/4.  Support for tomorrow in the May '09 contract is $3.44 1/2 then small support at $3.37 1/2 and resistance should be $3.50 3/4 then $3.52 1/4.  I am looking for some turn around Tuesday action tomorrow.

MEAL - May '09 Electronic
Open - $267.50, High - $269.30, Low - $259.50, Close - $260.80 Down $9.00

May '09 meal wasn't anything special today as it followed the same trade tendencies as the rest of the Ag commodities.  I have a cycle low in place on May '09 meal as of last Thursday but that doesn't mean the cycle is that exact low; it makes a projection in the area of the low.  Looking at today's trade we see some signs of a possible recovery tomorrow.  The troubling part of this cycle low is the market has now closed below $270.70 for three straight days and that would suggest a test of the contract low at $237.00.   I have call option positions in place where I know my risk and will continue to use this strategy until I see signs that would suggest otherwise.

Bottom line - I see May meal opening lower tonight on follow through weakness and then finding support and firming from there.  Again, similar to corn I believe the Dow Jones is going to have some effect on tonight's open for the Ag sector.  I see tomorrow having an early low and a late high looking for a turnaround Tuesday type action.  Support is $259.50 then $255.30 and resistance is $263.90 then $265.20.  I am looking for an early low and late high tomorrow but it all depends on how the Dow Jones reacts tomorrow.

HOGS - April '09 GLOBEX
Open - $60.925, High - $60.975, Low - $59.825, Close - $60.275 Down $.625 

April '09 hogs retraced some of its gains from last week today closing $.625 lower on the day.  Morning cash bids were up nicely according to the USDA but with the outside markets in the crapper it was hard to get anything going to the upside.  Also some of the cash optimism was factored into last week's trade.

The market action in the April '09 contract was just a pause to make a move higher in the future.  We bounced off of the 50% retracement level of Friday's price range ($59.825) and closed above it.  With this being said it looks as if the market wants to make another run at Friday's high of $61.075 at some point in the near future.  June '09 is also holding above $71.175 which is the 50% retracement level back to the $69.62 low prior to our rally.  As long as we hold $71.175 the market is still poised to test the most recent high of $72.75 at some point in the near future. 

Bottom line - I am looking for some early weakness tonight/tomorrow and test the $59.82 level in the April '09 and also the $71.175 level in the June '09 contract.  Cutout was mildly lower tonight only down $.13 but we sure could have used some positive news in what seems to be a huge bear blanket surrounding the markets today.  I expect some recovery for the hog sector tomorrow along with the grains with projections of early lows and late highs.  April '09 support for tomorrow is $59.825 then $59.55 and if we get bearish then $58.60, resistance is at $60.45 then $61.075-$61.275.  June '09 support is $71.175 then $70.825 while resistance should be $71.925-$72.125 then $72.75.  I don't think the high end of my resistance levels for either April '09 or June '09 are attainable tomorrow unless we get major rallies in other markets.

NW_LS500
Des Moines, IA     Mon, Mar 02, 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 steady to weak;
butts, sknd hams, and sdls bellies steady; lean trimmings firm. Trading slow,
with light to moderate demand and mostly moderate offerings.




-----------------------------------------------------------------
Loads PORK CUTS          :             52.38
Loads TRIM/PROCESS PORK  :               6.0
-----------------------------------------------------------------

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
-----------------------------------------------------------------------
         Total                   Today's Primal Cutout Values
Date     Loads      Carcass    Loin    Butt   Pic     Rib   Ham  Belly
-----------------------------------------------------------------------
03/02        58.4      56.22   70.76   60.01  40.12  98.00 40.32  71.26
Change :               -0.13   -0.36    0.26   0.00  -0.16 -0.25    unc
-----------------------------------------------------------------------

NW_LS831
Des Moines, IA     Mon, Mar 02, 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 :  1.32 hgr   :   .13 hgr   :   .88 hgr   :   .67 hgr
Negotiated      :             :             :             :
CARCASS BASIS   : 46.00-59.00 : 46.00-59.00 : 46.00-59.00 : 46.00-59.00
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    55.22    :    55.44    :    56.19    :    52.63
--------------------------------------------------------------------------
Head Count      :   24,537    :   11,776    :   17,344    :    6,489
==========================================================================

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.

Hog Comments: 02-24-09 Are hogs looking for a reversal?

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.


-----------------------------------------------------------------
Loads PORK CUTS          :            125.75
Loads TRIM/PROCESS PORK  :              11.0
-----------------------------------------------------------------

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
-----------------------------------------------------------------------
       Total                   Today's Primal Cutout Values
Date     Loads      Carcass    Loin    Butt   Pic     Rib   Ham  Belly
-----------------------------------------------------------------------
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
-----------------------------------------------------------------------

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.

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.



-----------------------------------------------------------------
Loads PORK CUTS          :              56.0
Loads TRIM/PROCESS PORK  :              16.0
-----------------------------------------------------------------

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
-----------------------------------------------------------------------
         Total                   Today's Primal Cutout Values
Date     Loads      Carcass    Loin    Butt   Pic     Rib   Ham  Belly
-----------------------------------------------------------------------
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
-----------------------------------------------------------------------

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.

Hog Comments - 02-20-09 - Hogs make a new contract low.

CORN - March '09 Electronic
Open - $3.53 1/4, High - $3.54 3/4, Low - $3.42, Close - $3.50 1/4 Down $.03

All I have to say today is Dow Jones.  The Dow Jones tested its November 2008 low of 7449.38 yesterday and made a new low of 7447.55 but managed to close at 7465.95 a few points above the November low.  Today was a different story; the Dow tested this level again and moved below this level with no particular concern.  We made a new low of 7249.47 which is still above the ever so important October 2002 low of 7197.49.  I have a buy signal (this isn't a recommendation) on the Dow Jones index at 7447 if we can get to this level either today or Monday.  If I were actually making the trade it would be on a buy stop with a risk management sell stop at 7220.

The Ag commodities markets in general took their lead from the Dow Jones today as everything was weak across the board.  March '09 corn made its lows early in the day trading all the way down to $3.42 before coming back some as we moved into the closing minutes of trade.  There was a buy signal (not textbook) on the daily chart at $3.46 3/4.  March '09 corn will need to stay above $3.46 3/4 on Monday for this signal to be good but the actual risk management sell stop would be at $3.41.

Bottom line - I spoke of the Dow Jones in my comments above but I was writing while the corn market was still open.  The Dow bounced off of its low and started a rally as the grain market was closing.  I expect March '09 corn to trade higher on Monday with an upside target of $3.56 1/4.  We should see buy stops triggered above today's high of $3.54 3/4.  We have been butting up against the down trend-line recently and that resistance level is $3.54 3/4 for Monday. 

  

MEAL - March '09 Electronic
Open - $277.40, High - $277.90, Low - $268.00, Close - $270.00 Down $6.50

$269.80 is a 62% retracement back to the low of $235.00 and today was our first test of this level.  March '09 meal barely closed above the retracement level but it did close above it.  The March '09 contract seems as though it wants to take a small breather here for the moment.  I don't expect any major rallies but I do look for a correction up to the $272.60 to $273.60 area with a possible test of $277.10.

I exited my long $290.00 March '09 puts today (because of expiration) and rolled down my long $320.00 April '09 call to an April $280.00 call for $6.50.  I also exited a short $350.00 May '09 call option I sold against my original long $320.00 April '09 call option.  I sold the call for $10.00 and bought it back for $1.00 so we had a profit of $9.00 to offset some of the cost of my original long $320.00 April '09 position.  The reason I sold the May call to help pay for the April call is I wanted upside coverage after I exited my long futures positions but I didn't want the exposure of a futures position.  I then put this call spread on ($320 April vs. $350 May) for a net cost of $5.50.  I also rolled the option down from $320.00 to $280.00 as mentioned above for $6.50 so I increased the cost of my $280.00 call option to $12.00 but I had a profit in our $290.00 March '09 put of $12.50 to cover my cost and move my ceiling down $40.00/ton.

Bottom line - As I said above I expect the market to be firmer come Sunday night and Monday.  I look for the $272.60 to $273.60 area to be tested with a possible test of $277.10 although I will not hold my breath for $277.10.

HOGS - April '09 GLOBEX
Open - $60.70, High - $61.00, Low - $57.90, Close - $58.20 Down $2.375

April '09 hogs have taken a nosedive since my last posting.  I said in my last posting the odds of an April '09 market bottom were increasing daily but I wasn't going to make that bold of a prediction to say the market had bottomed.  The market completely shrugged off last week's performance and took back all of the gains and then some.

I didn't like the fact that we challenged our contract low yesterday and then made new lows today.  I purchased some April '09 $59.00 put options for the time being because we violated our contract low.  I did this around the open of today's trade and I will hold these puts until I see signs of market improvement.  

Bottom line - I see the hog market making an early low on Monday and then firming as the day moves forward.  The cash was significantly lower today based on reduced kills but the cutout was only down $.22 so the packers regained some of their packing margin.  It is possible to see a test of $59.05 and then $59.45 on Monday.  

NW_LS500
Des Moines, IA     Fri, Feb 20, 2009     USDA Market News

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

Compared to Thursday's Close:       Fresh bone-in loins not tested;
butts 2.00-3.00 lower; sknd hams 20-23 lbs steady to firm, 23-27 lbs steady;
sdls bellies 14-16 lbs steady; lean trimmings 2.00 lower. Trading slow, with
light to moderate demand and mostly moderate offerings.



-----------------------------------------------------------------
Loads PORK CUTS          :              43.0
Loads TRIM/PROCESS PORK  :              10.0
-----------------------------------------------------------------

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
-----------------------------------------------------------------------
         Total                   Today's Primal Cutout Values
Date     Loads      Carcass    Loin    Butt   Pic     Rib   Ham  Belly
-----------------------------------------------------------------------
02/20        53.0      57.00   72.83   62.72  35.89  99.84 41.03  72.26
Change :               -0.22    0.76   -1.03  -5.17   0.39  1.00    unc
-----------------------------------------------------------------------

NW_LS831
Des Moines, IA     Fri, Feb 20, 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 :  2.23 lwr   :  3.02 lwr   :  2.93 lwr   :   .18 hgr
Negotiated      :             :             :             :
CARCASS BASIS   : 46.50-62.90 : 46.50-62.90 : 46.50-62.90 : 47.50-57.50
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    56.61    :    57.14    :    57.42    :    55.63
--------------------------------------------------------------------------
Head Count      :   23,888    :    9,076    :   13,302    :   10,386
==========================================================================

 

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.

Hog Comments - 02-10-09 - Hog wild day in the pig market!

IF YOU HAVE ANY SUGGESTIONS TO IMPROVE THIS COMMENTARY PLEASE EMAIL ME AT jknutson@hurleyandassociates.com. 

CORN - March '09 Electronic
Open - $3.74 1/2, High - $3.80, Low - $3.68, Close - $3.76 3/4 Down $.00 3/4
 As a review from yesterday I said I thought the $3.69 to $3.66 would be a target area of mine for the very short-term.  The market low today was $3.68 so we have met that objective thus far.  I had orders in to buy futures against my long $3.60 puts today and I only filled 1/3 of my position at $3.69 and my orders at $3.65 and $3.63 were unfilled.

I think the market will have some follow through and open up slightly this evening but find resistance rather early in the session.  I think the market will continue to retreat back toward $3.74 and ultimately the $3.68 level which was today's low.  I think we still have some downside potential even with the rally that we had on the close today.  The funds were net sellers today but not in any major fashion.

Bottom line - I expect a slightly higher open tonight with almost immediate resistance and then we should sell off and test $3.74 but I ultimately think we will touch $3.68 again either tonight or tomorrow.  The Senate passed the stimulus package today and guess what the Dow Jones has done since then; it has moved lower and is now trading down around 380 points as I write this.  With this being said I think we should see some spillover weakness from Wall Street tonight.


MEAL - March '09 Electronic
Open - $313.40, High - $316.20, Low - $307.10, Close - $312.10 Down $1.70
March '09 meal tested the area I talked about yesterday, I said a believed we would test $310.50 with an ultimate test of the $307.80 to $305.30 area.  The March '09 low today was $307.10 which met my target objective in the short-term.  I still think we need another test of the $307.80 to $305.30 area once again which could happen either tonight or tomorrow.  The daily chart still doesn't look that great from a bullish perspective and I still have my call spread in place as well as my long $290.00 March '09 puts to buy futures against if we break far enough.

Bottom line - As I mentioned above I think we will be weaker tonight and even tomorrow early in the session.  The market still doesn't feel great from a bullish perspective and therefore I don't want to have aggressive positions in place with the market looking like it does.  I will continue to have some type of coverage in place in case I'm wrong because it is no secret that I have been before!


HOGS - April '09 GLOBEX
Open - $60.575, High - $62.75, Low - $60.075, Close - $62.30 Up $2.225
April '09 hogs had a great day with the market rallying $2.225/cwt today and keeping my buy signal from Friday intact.  I was weary of the strength of the signal with yesterday's action but we didn't take out the previous low of $59.80 which is the risk management stop area.  The market still looks good to me from an intra-day perspective and I believe we will continue to move higher tomorrow.

With today's move I am feeling better about my buy signal at $60.65 that I talked about for Friday.  If this signal is good, which after today feels much better, we should continue to move higher from here.  This signal is common at market tops and bottoms in the past and this could be a bottom too but we need to see more confirmation from a weekly perspective to make that call. 

Bottom line - I am still not hedged and have been waiting for a long time but I don't want to get stuck in front of a big rally from low market levels.  Being we closed above $61.92 I look for the market to test $63.25 and if we can get above this level then we should see some GOOD short-covering in the market place and then get up to the $65.75 to the $67.15 area.  I don't expect a test of these levels until we close above $63.25 for a few days first.  I look for the market to rally again tomorrow and challenge today's high of $62.75 and then the $63.25 area shortly thereafter.

NW_LS500
Des Moines, IA     Tue, Feb 10, 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 1/4 trim loins weak;
butts 1.00-2.00 higher; sknd hams 20-23 lbs mostly 2.00 higher, 23-27 lbs
mostly 2.00 lower; sdls bellies steady; lean trimmings steady to mostly 2.00
lower.  Trading moderated, with light to moderate demand and moderate to heavy
offerings.


-----------------------------------------------------------------
Loads PORK CUTS          :            131.80
Loads TRIM/PROCESS PORK  :              23.0
-----------------------------------------------------------------

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
-----------------------------------------------------------------------
         Total                   Today's Primal Cutout Values
Date     Loads      Carcass    Loin    Butt   Pic     Rib   Ham  Belly
-----------------------------------------------------------------------
02/10       154.8      57.81   76.41   62.60  37.71 101.21 39.45  72.36
Change :                0.06    0.06    2.82  -0.41  -0.16 -0.91  -0.02
-----------------------------------------------------------------------

NW_LS831
Des Moines, IA     Tue, Feb 10, 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 :  1.44 hgr   :  2.05 hgr   :  2.01 hgr   :   .97 lwr
Negotiated      :             :             :             :
CARCASS BASIS   : 44.00-58.78 : 45.00-58.78 : 45.00-58.78 : 44.00-55.55
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    55.22    :    57.15    :    57.08    :    50.92
--------------------------------------------------------------------------
Head Count      :   26,895    :   13,993    :   18,794    :    8,101
==========================================================================

 

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.

Hog Comments - 01-28-09 - We did it, an up day in hogs!

***NOTICE - I may not have a post tomorrow due to my schedule.***

CORN - March '09 Electronic
Open - $3.78, High - $3.86, Low - $3.72 1/2, Close - $3.84 1/2 Up $.07

March '09 corn did what I thought was going to do today, I expect us to have an early low and a late high which is what happened.  The opening got off to a lower start but it didn't take long for the market to trade in positive territory.  This morning I bought back some of the futures positions I exited last week, made $.05 and exited them because of the way the intra-day charts look.  The futures were purchased against my $3.60 puts that I own so the market couldn't get away from me to the downside.  

It looks like corn should open better tonight and rally early on and then settle into a mixed mode until morning.  The weather forecast for South America dried up some for the weekend but there's still a system coming in next week that is supposed to bring good moisture.  The market will probably keep some premium in the market because of the drier weekend forecast but with next week's system still in play I don't think we will get crazy to the upside.  The reason I purchased corn this morning is because we held the $3.77 number I spoke of yesterday.

Bottom line - with an expected better opening tonight I see the trade making a small move higher and then drift from there.  I see today's high of $3.86 as resistance for tonight and I see support at $3.79 1/4 to $3.77 1/2.  I think we can see $3.79 1/4 but not so sure on the $3.77 1/2 as of yet.  The Dow Jones rallied after the grain markets closed so it may help the commodities remain firm.  $3.77 is still a very key number as far as I am concerned.

MEAL - March '09 Electronic
Open - $308.00, High - $314.80, Low - $304.00, Close - $311.50 Up $2.90

I said yesterday that $292.00 looked like a target area for March '09 meal but we needed to close below $305.00 first.  We got as low as $304.00 today but failed to close below this support number.  Meal was stronger today in conjunction with soybeans and corn based on the South American weather forecast.  I did buy back some of the meal I exited last week and earlier this week.  I averaged a price of $313.00 which is currently above the market.  

I bought the meal futures against the $290.00 puts I have in place to protect the downside of the market if it should continue to drop.  I am still not a fan of meal at this point but with the weather forecast turning drier over the weekend I wanted some of the coverage back in place which is below where I exited my original positions anyway.  

Bottom line - $309.90 and $308.70 are support areas for the market tonight and tomorrow.  I also see today's low of $305 as a support area but I don't think we will get that low unless we see a forecast change.  I think the market will open firmer tonight and make a run toward today's high of $314.80 but I don't think we will get that high.  I think we will have an early high tonight and late low tomorrow.  

HOGS - April '09 GLOBEX
Open - $60.80, High - $61.775, Low - $60.40, Close - $61.35 Up $.65

April '09 had a nice little recovery day but it didn't do anything to the charts to make me get too excited about a major rally.  April '09 finally did what I thought it would do today; we had an early low and a late high.  I said yesterday that we could see a retracement up to $61.35 which is exactly where we closed the market today.  I also said we could see more selling below $60.25 (yesterday's low) if we got there but we didn't reach those levels.  

I have a cycle buy area which came in on Monday for the April '09 contract and it has the market rallying into February 11th, 2009.  This doesn't mean it'll happen but it's been a pretty reliable tool over the past year.  Today was the first day since January 6th, 2009 that the April '09 futures have closed above where it opened; and we haven't closed above a previous day's high since January 2nd, 2009!

Bottom line - tomorrow will be important technically for me, I would like to see the April '09 futures close above $61.775 which was today's high.  If we do that it will be the first time since Jan 2nd, 2009 as I mentioned before.  If we can do this we should test $63.07 at some point in the near future.  I see the market as mixed to higher tomorrow so hopefully we get our close above $61.77.  I am looking for an early low and a late high in April '09 futures tomorrow.

NW_LS500
Des Moines, IA     Wed, Jan 28, 2009     USDA Market News

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

Compared to Tuesday's Close:        Fresh bone-in loins unevenly
steady; butts mostly 1.00-2.00 lower; sknd hams 20-27 lbs steady to 2.00 lower;
sdls bellies 14-16 lbs generally steady; lean trimmings mostly 1.00 lower.
Trading moderate, with mostly light demand and moderate offerings.



-----------------------------------------------------------------
Loads PORK CUTS          :            133.38
Loads TRIM/PROCESS PORK  :              20.0
-----------------------------------------------------------------

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
-----------------------------------------------------------------------
         Total                   Today's Primal Cutout Values
Date     Loads      Carcass    Loin    Butt   Pic     Rib   Ham  Belly
-----------------------------------------------------------------------
01/28       153.4      57.62   76.53   59.88  37.69  99.29 39.41  73.39
Change :               -0.52   -0.25   -1.65   0.73  -1.23 -1.28  -0.49
-----------------------------------------------------------------------

THE CASH PRICE REPORT WAS NOT UPDATED BY THE USDA AT THE TIME OF THIS BLOG POSTING.

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.

Hog Comments - 01-26-09 - Grains shaky at best, hogs down again.

CORN - March '09 Electronic
Open - $3.93 3/4, High - $4.02 1/2, Low - $3.83 3/4, Close - $3.93 3/4 Up $.03 1/4

More of the same today for March '09 corn, we open with strength but can't seem to keep it going throughout the trading session.  The weather is still traded based on forecast over the actual event so it seems.  With that being said some weathermen  had more moisture in their forecasts than others until the noon update, then there were several that changed theirs to wetter as well.

I haven't changed my mind about corn since my last posting; I am still looking for a short-term correction down to the $3.59 area.  The charts AGAIN gave a warning signal today if you are long the market; I am out of my feed positions other than a call option on 22% of needs.  I DO want to own corn for the long term but I don't want to at these levels, I think we will have a better opportunity to own it cheaper.

Bottom line - It looks like we should see March '09 corn move lower tonight and test $3.90 3/4 to see if we have support.  If there isn't any support at this level then our next stop will be $3.87 and then $3.83 3/4.  I would not be surprised to see $3.83 3/4 tested either tonight or tomorrow, so once again weaker trade is expected for tomorrow.

MEAL - March '09 Electronic
Open - $320.40, High - $325.00, Low - $309.90, Close - $316.30 Down $2.00

March '09 meal didn't catch fire early in the session like soybeans did, on its high the market was only up $6.70 which was during the first hour of trade.  Soybeans however got as much as $.32 1/2 higher during the first hour of trade.  Meal only made it 33.5% of the way to its limit move and soybeans made it 46.5% of the way to its limit.   Meal was a flat out lager today.

Crude oil was both up and down fluctuation $3.39 from high to low.  The enthusiasm was during the morning hours of trade and then crude backed off in conjunction with the Dow Jones.  The U.S. Dollar was weaker today down over 80 points for most of the day which in theory is good for commodity prices.  Most of the volatility today came from weather forecasts as I mentioned in the corn comments above.  The March '09 hasn't proven it yet but the action we had today is similar to that of a top in the meal market.

Bottom line -   I still need some confirmation to call a top but I liquidated the remaining few contracts of meal I had and purchased some March '09 $290.00 puts to buy futures against if/when the market drops to those levels.  A long put and a long future is called a synthetic call option where it works near the same as a call option.  If we are comfortable with the market and think it's moving higher we can salvage some cost of the put option and still have our long futures in place.  If you are straight long a call option you have to keep it in place and let the market move through the entire premium you paid before your call begins to return you intrinsic value.

HOGS - April '09 GLOBEX
Open - $64.70, High - $64.70, Low - $62.70, Close - $62.775 Down $1.62

April '09 hogs didn't have a very good day AGAIN today closing down $1.62 at $62.77.  I said in Friday's comments (which I posted Saturday morning) that we needed $64.02 to hold support but the market fell short of that today.  April hogs broke support and kept moving lower without looking back.  I would like to see the market move back above $64.02 tomorrow although it would be a very healthy move higher if it did.

I have been waiting for this market to bottom so we could hedge on a bounce, we haven't seen it yet.  We have now broken below a support level by a significant amount and I will be looking to place hedges (via put spreads) on hogs that need to go to town in the near future.  I still believe the market is looking for a bottom and once the selling runs out we could see a nice pop in the market but the question is evident.  When?

Bottom line - a majority of the downward movement came in the first hour of trade today.  The hourly session's ranges became smaller as the day moved on therefore slowing down.  I expect some better trade tomorrow with a possible run at $63.70, the 50% retracement level of today's trade range.  I say this with the assumption there will be nothing crazy going on in the cash market tonight.  Better trade is expected in the April '09 futures for tomorrow.

NW_LS500
Des Moines, IA     Mon, Jan 26, 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 retail cuts steady to
weak; sknd hams 17-20 lbs weak, 20-23 lbs steady, 23-27 lbs weak; sdls bellies
14-16 lbs steady to 1.00 lower; lean trim firm. Trading slow, with light to
moderate demand and offerings.



-----------------------------------------------------------------
Loads PORK CUTS          :              48.0
Loads TRIM/PROCESS PORK  :               8.0
-----------------------------------------------------------------

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
-----------------------------------------------------------------------
         Total                   Today's Primal Cutout Values
Date     Loads      Carcass    Loin    Butt   Pic     Rib   Ham  Belly
-----------------------------------------------------------------------
01/26        56.0      57.75   75.69   62.69  36.67 100.40 40.50  72.90
Change :               -0.06    2.15   -0.41  -2.29  -0.61 -0.43  -1.22
-----------------------------------------------------------------------

NW_LS831
Des Moines, IA     Mon, Jan 26, 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 :  1.11 lwr   :  1.25 lwr   :   .89 lwr   :   .62 hgr
Negotiated      :             :             :             :
CARCASS BASIS   : 44.00-62.16 : 44.00-62.16 : 44.00-62.16 : 44.00-59.00
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    57.50    :    59.07    :    59.56    :    54.91
--------------------------------------------------------------------------
Head Count      :   24,405    :   10,407    :   13,319    :   10,554
==========================================================================

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.

Hog Comments - 01-22-09 - Mixed hogs but grains are lower.

CORN - March '09 Electronic
Open - $3.89 3/4, High - $3.94 3/4, Low - $3.78 1/2, Close - $3.87 1/2 Down $.02 3/4

March '09 corn finished higher in the overnight session but when Microsoft announce 5,000 job cuts the Dow Jones turned south and the Crude Oil market was already trading lower.  With all of this happening we saw the opening calls drift to lower instead of a $.02 higher open.  The March contract opened down $.01 but quickly sold off in conjunction with soybeans.  

The March '09 contract looks top heavy to me, I exited all except around 20% of my long futures position (which are long against $3.60 March '09 puts) as of Friday and Tuesday morning's open.  I still have $3.60 puts in place to buy against if the market gets that low or if I change my mind I can get long the market and know that I am not going to be in a situation where the market can move against me that much.  I exited March '09 corn at $3.77 and $3.97 on Friday and Tuesday respectively.  

Bottom line - I expect corn to continue to see weakness as we had a relatively low volume day today.  We have a gap at $3.90 1/4 that we could look to fill tonight and if we do I have a sell signal at $3.88 stop.  If the sell stop is filled then I would have a risk management buy stop above the most recent high in the overnight trade.  I look for the market to be firm early in the evening trade hours but then fade.  I expect tomorrow to be a selloff day with a test of $3.83 1/2 to $3.82 1/4.

MEAL - March '09 Electronic
Open - $320.00, High - $325.20, Low - $313.50, Close - $318.20 DOWN $2.20

March '09 meal was weak along with soybeans today based on South American rain forecasts for the weekend.  The forecast is for some rain showers to move through some of the troubled soybean areas.  I exited half of my soybean meal contracts on Tuesday morning around $312.50 to reduce my long exposure in the market.  I have $300.00 Feb '09 put options in place to protect the downside of the market in the event it would have moved lower but my options have an expiration date of Jan 23rd. 

Bottom line - March '09 meal looks like it could test $317.50 to $316.50 for support tonight but I am not a big fan of higher prices right here.  We got a warning signal last week and we are setting up to provide another one this week pending on tomorrow's close.  I expect weaker trade tonight and tomorrow but the market direction will be influenced by weather forecasts for South America.

 

HOGS - April '09 GLOBEX
Open - $65.90, High - $66.30, Low - $65.35, Close - $65.40 UP $.05

April '09 lean hogs have been trolling along the bottom of its price range for over a week now but has not built has failed to pick a direction to break out of.  The bottom end of the range is the low from January 14th at $64.27 and the top of the range is $67.30.  The longer the market trades in this area the larger the move it will have when it breaks out of its range.

  

The market has experienced good buying below $65.30 in the April '09 contract and I also have a buy signal at $65.55 stop with a risk management protective sell stop at $64.00.   The cash and cutout markets were higher today which should bring some stability to futures prices for tonight and tomorrow.  Cutout was up $.22 today which isn't much but it beats being lower.

Bottom line - I expect tomorrow's trade in the April '09 contract to be firmer with $65.35 being an area of support, the market settled today at $65.40 just $.05 above support.  If $65.35 is violated for a couple hours tonight or tomorrow then we could see a test of $65.12 and then possibly down to $64.40 although I see it as unlikely.  I hate to sound like a broken record but I do not want to be extensively short at these levels.  I am waiting for a rally opportunity to apply some hedges if the environment feels right.  I look for firmer trade tomorrow with an ultimate projection point of $66.30 in the short-term and then $67.12.

NW_LS500
Des Moines, IA     Thu, Jan 22, 2009     USDA Market News

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

Compared to Wednesday's Close:      Fresh bone-in loins 1.00-2.00
higher; butts steady; sknd hams 17-20 lbs 1.00-4.00 lower, 20-27 lbs steady;
sdls bellies firm on a light test, lean trimmings not established. Trading slow
to moderate, with light to moderate demand and offerings.



-----------------------------------------------------------------
Loads PORK CUTS          :             81.75
Loads TRIM/PROCESS PORK  :               4.0
-----------------------------------------------------------------

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
-----------------------------------------------------------------------
         Total                   Today's Primal Cutout Values
Date     Loads      Carcass    Loin    Butt   Pic     Rib   Ham  Belly
-----------------------------------------------------------------------
01/22        85.8      58.13   75.92   61.50  37.12 100.04 41.25  74.12
Change :                0.22   -1.85    0.53  -0.87  -0.48  0.02   4.63
-----------------------------------------------------------------------

NW_LS831
Des Moines, IA     Thu, Jan 22, 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 :   .35 hgr   :   .81 hgr   :   .70 hgr   :   .63 hgr
Negotiated      :             :             :             :
CARCASS BASIS   : 42.00-63.45 : 42.00-63.45 : 42.00-63.45 : 45.00-61.00
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    57.58    :    59.97    :    59.95    :    54.39
--------------------------------------------------------------------------
Head Count      :   30,685    :   14,039    :   17,515    :   12,790
==========================================================================

 

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.

Hog Comments - 01-15-09 - No follow through rally on hogs today.

Please note that my comments will be limited next week as I will be in meetings.

CORN - March '09 Electronic

Open - $3.66 1/2, High - $3.69 1/4, Low - $3.59 3/4, Close - $3.65 1/4 Down $.01 1/4

March '09 corn didn't have much in the way of fireworks today to stay at pace with the soybean market.  Fundamentally the market received negative news with at best a dismal export report.  The market touched the resistance level of $3.69 ($3.69 1/4 actually) that I spoke of yesterday and couldn't break through.

 

As I write this the corn market is $.07 higher and I have been selling it tonight to reduce some long futures position I put on yesterday.  I am keeping my $3.60 March '09 call options in place for now as I rolled them down from $4.00 with the profits from the short $4.10 March call and long $4.40 call position I put on Friday prior to the report.  I exited the short $4.10 March call yesterday because it served its purpose and the position picked up around $.18.  I am taking profit on my long futures to stand aside and not have a definite directional position on right now.

 

Bottom line - I have a potential sell signal at $3.68 3/4 on a sell stop tonight/tomorrow.  I would put that order in right now as a sell stop and if it fills I would place a risk managing buy stop to exit the position $.01 above the current high.  If the market continues its trek higher tonight and into tomorrow we may see a test of the $3.79 1/2 area that I talked about yesterday.  I would definitely sell against that level for now and wait for more direction from the charts.  Please do what is right for you, as always these are my opinions and I have the luxury of changing my mind prior to my next blog entry.  As always follow your plan!

MEAL - March '09 Electronic

Open - $296.90, High - $316.60, Low - $292.50, Close - $305.00 UP $8.00

March '09 meal took its lead from soybeans today that had a tremendous export number this morning.  I am honestly confused by meal at this point and if you will notice the last sentence I wrote in my meal comments yesterday I said "I will continue to keep my calls in place for coverage because what I think and what the market does are two different things.  It is very important to know and understand that difference."

My point was proven today, I said I thought if the market got going to the upside $308.00 would provide and hold resistance.  The March contract BLEW right through $308.00 today but did settle at $305.00 which is obviously under the aforementioned resistance level.  We filled at gap left at $313.20 from Monday and then backed off from there.  Based on the way the intra-day charts look, it seems like we could make another run at today's high of $316.60.

Bottom line - If we continue to trade above $304.60 tonight and tomorrow then I think we could make a run at the high of $316.60 but if we fail to stay above $304.50 then we could test $300.00 and ultimately $292.50.  The short-term charts suggest tomorrow being a better day tomorrow but be careful if we begin to trade below $304.50 for a period of time!

HOGS - April '09 GLOBEX

Open - $66.30, High - $66.30, Low - $65.30, Close - $65.85 DOWN $.85

I said yesterday I thought we would trade the lower cutout number early and possibly test $65.65 which happened as $65.30 was the low for the day.  April '09 hogs failed to mount much of a rally though which was surprising to me from a technical perspective.  I guess it is kind of hard to do when packer margin is in the red.

  

The cutout today was marginally higher, up $.05 and cash was both sides of unchanged.  The overnight markets are higher as I write this but nothing major, up $.42.  I am expecting a mixed day tomorrow as the market should be finding a low by next week if it hasn't already; I say this as a result of some short-term cycle projections I look at.

Bottom line - The market should remain firm tonight and maybe even early tomorrow as the US Dollar index is weaker tonight and the Dow Jones is trading higher.  The Dow Jones looks like it may have put in a short-term bottom here today but tomorrow will be the teller of that story.  I look for a test of $66.55 either tonight or tomorrow.

NW_LS500
Des Moines, IA     Thu, Jan 15, 2009     USDA Market News

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

Compared to Wednesday's Close:      Fresh loins steady to 1.00
higher; butts firm; sknd hams mostly 2.00 lower; sdls bellies unevenly steady;
lean trimmings generally steady. Trading slow, with light to moderate demand
and offerings.



-----------------------------------------------------------------
Loads PORK CUTS          :             67.75
Loads TRIM/PROCESS PORK  :               5.0
-----------------------------------------------------------------

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
-----------------------------------------------------------------------
         Total                   Today's Primal Cutout Values
Date     Loads      Carcass    Loin    Butt   Pic     Rib   Ham  Belly
-----------------------------------------------------------------------
01/15        72.8      56.26   76.48   60.54  38.20  94.86 40.11  64.76
Change :                0.05    0.17    2.03   0.03   0.28  0.04  -1.41
-----------------------------------------------------------------------

NW_LS831
Des Moines, IA     Thu, Jan 15, 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 :   .61 lwr   :   .08 hgr   :   .02 lwr   :   .21 lwr
Negotiated      :             :             :             :
CARCASS BASIS   : 43.50-63.85 : 44.00-63.85 : 44.00-63.85 : 43.50-59.46
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    57.34    :    59.03    :    59.31    :    54.58
--------------------------------------------------------------------------
Head Count      :   24,432    :   10,086    :   14,304    :    9,198
==========================================================================

 

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.