Dec '08 Corn Daily Chart
CORNI should have known not to say the market felt like it should close above $6.25 today. Oh well, I guess you can't win them all. The market did take a breather today but it didn't violate any of our major support points. Dec '08 corn closed above the 50% retracement level of yesterdays trade which is $6.06, we settled at $6.06 1/2. $5.94 was yesterday's low and we didn't violate that level which is good. I believe we saw some profit taking today after what turned out to be quite the week closing the market $.51 1/2 higher on the week with a range of $.70 cents. Weather doesn't seem to be that much of a concern, the forecast has rain falling over parts of the cornbelt this weekend and if the amounts are not as much as the trade expects we should see higher markets on Sunday evening. I am still long the futures that I bought yesterday and will manage them next week. Like I said yesterday, if I can turn my long futures into an option strategy at some point I will. I like to know what my risk is.
Our weekly close was good so with that being said I would expect a test of the $6.25 high at some point next week but if we can't and we close below a previous day's low then we could make a retracement back to $5.65ish. I feel as if we will continue to move higher from here to see if there are any buyers above $6.25. We closed today as an inside day which is a sign of uncertainty of direction. Which ever direction we break out of on Monday will probably be the direction we go for a day or two. I mean if we close above today's highs then we should continue a move higher and if we close below today's lows then take further profits. I feel as if we should be higher on the week next week unless we get a bearish weather forecast. A popular independent crop tour was held this week and they released their projected yield on corn to be 153.3 and 39.95 on soybeans. Both of these numbers are below the USDA August crop production estimates so they could be viewed as friendly. The trade will now be looking for more yield insight from a couple of other private forecasters in the coming weeks as well as the USDA report in September.
Crude oil and the U.S. Dollar index almost had a complete reverse trade today, giving back all the gains in oil and gaining back most of the loses in the U.S. Dollar index. There wasn't much in the way of headlines today involving Russia and the U.S. in their war of words over a anti-missle defense system that the U.S. is going to build in Poland. Russia has since pulled out of military involvement with NATO. This has the oil markets a bit jittery but there didn't seem to be a care in the world about it today. Maybe I missed some important news but I don't believe I did.
Sep '08 Meal Daily Chart
MEAL
Sep '08 meal was the strongest link in all the grains products today. I suspected meal to be a follower today but actually it was independantly strong throughout most of the day. Soybeans were both the strongest and the weakest at given points of the day. Beans almost traded higher but failed to mount any significant momentum to carry it through to the upside. Again like corn both soybeans and soybean meal had good weekly closes and assuming no major changes to weather I would expect better trade next week. My Sep '08 options were exercised today on the close which puts me long futures at $340.00 Sep '08. I will continue to stay long the futures for now and manage my position with stops OR if I can find a reasonable option strategy that doesn't cost an arm and a leg I will enter into it which is what I would prefer.
Oct '08 Hog Daily Chart
HOGS
Oct '08 hogs made its most dramatic move today on the close. The futures were trading quietly for most of the day only to fall apart going into the last couple minutes of trade. After seeing the cash and cutout numbers this afternoon I would venture to guess that someone was positioning themselves for this news. I have a couple of numbers that I am watching. I have been talking about $75.15 and $74.27 which were 50 and 62% retracement levels back to the last reaction low of $71.42. We closed the market today at $73.75 which is below both of those retracement levels and would now suggest a test of $71.42. If you draw a retracement back to the July 1st, 2008 low of $68.25, $73.55 would be 50% or support. So, I have a few numbers tangled up here but I will list them in the order of support in which they should be viewed. 1.) $73.55, 2.) $72.30, 3.) $71.60 and then all the way down to $68.25. $73.55 has held support both yesterday and today in the Oct '08 electronic futures, if we close below this level next week then $72.30 should come pretty fast and ultimatley moving to $71.60. Like I mentioned in corn, the U.S. Dollar index mounted a rally that erased most of yesterday's losses, this will not be good for the future export possiblities of pork.
I feel like we should take a stab at lower prices again next week. We closed below last weeks low of $74.20, with that said it looks like $72.30 should be just around the corner. If cutout continues its meltdown we could see $71.60 if short order as well. I am not bullish hogs at the moment. I spoke yesterday of a buy signal I had the other day which would have gotten me long yesterday but would have been stopped out today. I chose not participate in that buy signal. I am hedged with most of my positions in Oct '08 and Dec '08. I will move my Oct '08 positions to the Dec '08 contract within the next couple of weeks.
I hope you have a wonderful weekend and we will blog again next week!
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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08/22 52.5 88.86 113.49 101.56 66.74 107.00 85.01 84.33
Change : -1.45 -1.66 0.69 -3.95 -3.79 -1.75 -0.31
-----------------------------------------------------------------------National Direct Hog Price Comparison
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: National : Iowa : Western : Eastern
: : Minnesota : Cornbelt : Cornbelt
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Base Price is the price from which no discounts are subtracted and
no premiums are added.
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BARROWS & GILTS : 1.56 lwr : 1.51 lwr : 1.65 lwr : 1.27 lwr
Negotiated : : : :
CARCASS BASIS : 74.00-83.78 : 76.00-83.78 : 74.00-83.78 : 75.50-83.00
185 lb Base Hog : wtd avg : wtd avg : wtd avg : wtd avg
Plant Delivered : 81.14 : 81.36 : 81.45 : 80.70
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Head Count : 20,848 : 8,552 : 12,160 : 8,626
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Hurley & Associates believes positions are unique to each person’s risk bearing ability; marketing strategy; and crop conditions, therefore we give no blanket recommendations. The risk of loss in trading commodities can be substantial, therefore, carefully consider whether such trading is suitable for you in light of your financial condition. NFA Rules require us to advise you that past performance is not indicative of future results, and there is no guarantee that your trading experience will be similar to the past performance.
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