CORN
I'm back! I apologize for not being able to post comments last week but I was traveling and it was difficult to find the proper time to complete the task. Dec '08 corn had almost a $.30 range last week but only closed $.03 lower on Friday than where it opened on Monday. The close for the week was $.04 3/4 higher than the previous Friday's close. Sunday evening had a lower opening but through the market session last night and today we managed to close the market higher on the day.
I am not a bear at these levels and I think we have good support at the $3.75 level in Dec '08 corn but there is no rush to go out and buy corn as a long-term investment either. We are still in the consolidation mode for the market and there are a lot of opinions being formed between $4.33 and $3.60 so which ever direction we break out of this range could provide for a nice move in the direction of the breakout.
Bottom line - I expect corn to be weaker early tomorrow and make early low's and late high's for the day. I expect a test of $3.78 sometime tonight or during tomorrow's day session and then recover from those levels. I expect this assuming the Dow Jones or Crude Oil doesn't have a meltdown.
MEAL
Dec '08 meal had a strong day today closing above Friday's high price of $269.20. Like corn I am not a bear at these levels but I am not expecting a strong day tomorrow. Crude Oil hasn't boosted soybean meal prices in recent weeks however Oil is getting close to an old low of $50.53 which was a technical target by some Wall Street analysts. The most recent low is $54.67 and is only $4.14 away from the downside target of $50.53.
If crude oil holds the old low of $50.53 I think we could see a turn in the Soybean and meal market. The U.S. Dollar Index is still toward the top end of its range but it looks to me like it is trying to find a top and poised to move lower in the coming months. If this is the case we could see Crude Oil rally based on a falling dollar not to mention upcoming OPEC meetings to cut oil production.
Bottom line - I expect Dec '08 meal to be weaker tomorrow with an early low and late high. Support tomorrow should be at $267.40 and then $264.60 but I would expect the low's for the electronic session to be set tonight instead of tomorrow.
HOGS
Dec '08 hogs had a very quiet day today with what seemed to be a lack of interest. Nothing has really changed in the hog market for me other than we completed the Goldman Roll last week and cash has been steady according to the USDA. I have short positions in the Dec '08 contract but will be rolling them to the Feb '09 soon as the Dec '08 contract will no longer be a good hedge location as we get closer to its expiration.
Bottom line - I expect weak trade again tomorrow but I don't expect a blow out to the downside. I think it is even possible that our low might be in at $53.80 in the Dec '08 contract. I think the market could trade down to $54.87 tomorrow and over the next couple days make a test of the low at $53.80. I don't see a tremendous amount of downside in the Dec '08 contract at this point.
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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11/17 76.8 55.71 72.77 62.93 35.13 86.05 42.62 64.01
Change : -0.70 -2.12 1.26 -0.19 0.69 -1.96 -0.32
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National Direct Hog Price Comparison
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: National : Iowa : Western : Eastern
: : Minnesota : Cornbelt : Cornbelt
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Base Price is the price from which no discounts are subtracted and
no premiums are added.
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BARROWS & GILTS : .69 hgr : .64 hgr : .70 hgr : .03 hgr
Negotiated : : : :
CARCASS BASIS : 41.00-54.05 : 41.00-54.05 : 41.00-54.05 : 46.32-53.38
185 lb Base Hog : wtd avg : wtd avg : wtd avg : wtd avg
Plant Delivered : 51.08 : 52.19 : 52.48 : 48.41
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Head Count : 25,961 : 13,265 : 17,017 : 8,334
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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.
