January 2009 Archive for The Lean Hog Perspective

Jeremy Knutson

***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.

Jeremy Knutson
1-877-212-2564
jknutson@hurleyandassociates.com

CORN - March '09 Electronic
Open - $3.92 3/4, High - $3.96 1/4, Low - $3.76 3/4, Close - $3.77 1/2 Down $.16 1/4

March '09 did what I expected it could do today, test the $3.83 3/4 level however the market didn't stop in that area.  The weather forecasts continue to confirm moisture in the dry areas of South America and it has the market on edge as we can tell by today's sell off. 

$3.83 was the 50% retracement level back to our most recent low of $3.58 3/4.  If the market has a shot at challenging our most recent high of $4.07 the market needs to get back above $3.83 otherwise I see a test of $3.58 3/4 which is my next target area.  Like I said yesterday I only have around 22% of my needs covered with a call option and I look to buy futures against some $3.60 puts I own in March '09.  

Bottom line - I expect the market to open weaker tonight and trade lower in the beginning hours of trade.  I expect the market to make an early low tonight and firm going into tomorrow's trading session.  I don't think we will see a test of $3.59 tonight or tomorrow, I think we will have an early low tomorrow and then firm as the day goes on.  If $3.77 holds as support we may not see $3.59 at all because $3.77 is a 62% retracement back to the $3.59 number.  I will be looking for clues tomorrow to see if I want to re-own the feed corn I exited last week.  I expect early lows and late highs tomorrow.

MEAL - March '09 Electronic
Open - $316.40, High - $320.60, Low - $306.00, Close - $308.60 Down $7.70

March '09 meal didn't have any issues with selling off today along with soybeans and almost every other Ag commodity.  I said yesterday I liquidated the remaining long soybean meal contracts I had in place and I then turned around and bought some $290.00 March '09 puts for $5.50 to buy futures against if/when the market drops.   I didn't like the way the meal chart looked and today it finally gave way to what the charts had been warning us about.

Bottom line - The meal market feels like it should open lower like corn, trade lower for a period and then turn and start firming going into the morning.  If the market trades firmer like I think it could do, I see $309.80 to $310.60 as resistance for tomorrow.  I feel like the market wants to test the $292.00 area but we need to get and close below $305.00 before I make that prediction although I feel $292.00 is a likely target.  I expect early lows and late highs tomorrow.

HOGS - April '09 GLOBEX
Open - $62.80, High - $63.07, Low - $60.25, Close - $60.70 Down $2.075

April '09 hogs didn't leave much time for those that were uncertain this morning.  The market opened lower and didn't look back.  Noon cash reports were $3.00+ lower in IA/MN and the Western cornbelt which seemed to have been traded prior to the reports being released.  Once the reports were released the market just settled into an approximate trade range of around $.35 or so.  

In Friday's comments I said we needed $64.02 to hold otherwise we could see another leg lower.  The market failed to hold $64.02 yesterday and closed well below it and just furthered the downward slide by $2.07 today.  I said yesterday I thought we could see a recovery back to $63.70 area and find resistance.  I was off by $.62 as $63.07 was as high as we got in the Globex trade.  I have to say I only could have been more wrong about today's action if I would have told you yesterday that I expected hogs limit up today!  I also said yesterday that we broke a key level of support for me and I was going to use some put spreads to cover some downside risk for now until the market turns.  I didn't get my options filled today but I sold futures as a delta hedge until I can get my put spread purchased.

Bottom line - It looks the market ran out of steam after the first hour of trade and the open to close ranges of the last couple hours were very narrow which suggests a slowdown in the directional move.  With this being said I also have a cycle indicator moving higher for tonight and tomorrows markets.  With all of this being said it looks like we could move higher tomorrow but the same setup was there yesterday and we all know what happened today!  I have to go with what the charts are saying for tomorrow and that would be for a small retracement to around $61.35 at some point in the day but I am not going to hold my breath.  We should see more selling below $60.25 tomorrow if we get that low.  I expect early lows and late highs tomorrow.

NW_LS500
Des Moines, IA     Tue, Jan 27, 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 to
3.00 lower; butts 1.00-2.00 lower; sknd hams 20-23 lbs steady to 2.00 lower,
23-27 lbs steady; sdls bellies 14-16 lbs steady; lean trimmings mostly 2.00
lower. Trading slow to moderate, with mostly light demand and moderate offerings.



-----------------------------------------------------------------
Loads PORK CUTS          :             97.25
Loads TRIM/PROCESS PORK  :              28.0
-----------------------------------------------------------------

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
-----------------------------------------------------------------------
01/27       125.3      58.14   76.78   61.53  36.96 100.53 40.69  73.88
Change :                0.39    1.09   -1.16   0.29   0.13  0.19   0.98
-----------------------------------------------------------------------

NW_LS831
Des Moines, IA     Tue, Jan 27, 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 :  1.95 lwr   :  2.33 lwr   :  2.61 lwr   :  1.60 lwr
Negotiated      :             :             :             :
CARCASS BASIS   : 43.00-61.75 : 43.00-61.75 : 43.00-61.75 : 43.00-57.50
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    55.73    :    56.80    :    56.92    :    53.41
--------------------------------------------------------------------------
Head Count      :   30,360    :   16,774    :   20,059    :   10,295
==========================================================================

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.

Jeremy Knutson
1-877-212-2564
jknutson@hurleyandassociates.com

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. 
 

-----------------------------------------------------------------
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.

Jeremy Knutson
1-877-212-2564
jknutson@hurleyandassociates.com

CORN - March '09 Electronic
Open - $3.85, High - $4.01, Low - $3.80 1/2, Close - $3.90 1/2 Up $.03

March '09 corn got off to a great start Friday morning as it opened $.04 lower and rallied from there.  The first hour trade was positive in the sense it was trading higher than where it opened at 10:30 a.m. CST and as I have said before if that happens statistically we will close above that level approximately 80% of the time.  That was the case today, we closed higher than where the day session open was.

I was reviewing my comments from Thursday as Friday's trade progressed and thinking wow, I am 0 for 3 today on market direction.  Everything I thought would happen didn't, I did expect a test of $3.83 1/2 to $3.82 1/4 which did happen except it was in the overnight trade session vs. the day session.  The market also filled the gap area I spoke of at $3.90 1/4 and rallied right through it.  The talk was less production out of South America and the general belief that beneficial rains would not fall in South America this weekend.

Bottom line - We have traded above $3.93 3/4 three of the last four trading days but have failed to close above it.  $3.93 3/4 is the 50% retracement level back to the most recent high of $4.29 on Jan 6th, 2009.  If we continually fail to close above this number I believe we will test $3.58 3/4 which is where I believe the market can go.  If we do get to this level I will be aggressive in covering feed corn needs for the future because I AM NOT a long-term bear of the corn market.  I expect weak markets on Sunday night and Monday but of course we are subject to the rains in South America but I still go with a lower call.

MEAL - March '09 Electronic
Open - $316.40, High - $326.00, Low - $314.80, Close - $318.30 Up $0.10

Action in March '09 meal today was a fluke in my opinion; it is the spec crowd betting on the rains that may happen in South America this weekend.  Like I said in the corn comments will be seeing a big reduction in soybean and corn production from South America if the dryness persists.  If indeed it stays dry we see continued support in the meal market just as it has been supported thus far on the issue of South American dryness.

Bottom line - I am still not a big fan of higher prices even though I was eating crow for most of Friday's day trade session.  I still have some upside on meal but it is minimal at best, I am waiting for a pull back toward $281.00 March '09 to extend my coverage again.  This week is the third out of the last four weeks to give warning signals that a top may be near.  I am being patient for now in regards to owning soybean meal.  If rains fail to materialize and it sends the market higher it will change the look of the charts which in turn will change my mind but for now I will stand aside.  I look for weak trade Sunday and Monday.

HOGS - April '09 GLOBEX
Open - $65.45, High - $65.45, Low - $64.02, Close - $64.40 Down $1.00

April '09 hogs have me eating my words to some degree today as I thought the market would hold support and rally.  I said April hogs had support at $65.35 but if we trade below this level for a couple of hours we could test $65.12 and then $64.40 (which I thought was unlikely).  The market bottomed out today at $64.02 before settling right at my number of $64.40.  

As I have been saying for some time now I am still waiting for a bottom to show up but the market is being stubborn.  If we close below $64.02 for two straight days we could be in for some extended downside from there.  As I said yesterday, the longer the market trades within a range the more explosive the breakout will be.  If April does break through $64.02 I may put some hedges in place for hogs going to town in the next 30 days.  I do not see the need however to be aggressive with longer-term hedges at this point.  

Bottom line - I am expecting sideways to lower trade on Monday as the market continues to look for direction outside of its current range.  There isn't much to say other than we need $64.02 to hold as support otherwise we could be setting up for another leg lower.

NW_LS500
Des Moines, IA     Fri, Jan 23, 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 loins steady to weak;
butts steady; sknd hams 17-23 lbs steady to firm, 23-27 lbs steady to 1.00 lower;
sdls bellies and lean trimmings not established. Trading slow to moderate, with
light to moderate demand and offerings.



-----------------------------------------------------------------
Loads PORK CUTS          :             67.13
Loads TRIM/PROCESS PORK  :
-----------------------------------------------------------------

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
-----------------------------------------------------------------------
01/23        67.1      57.81   73.54   63.10  38.96 101.01 40.93  74.12
Change :               -0.32   -2.38    1.60   1.84   0.97 -0.32    unc
-----------------------------------------------------------------------

NW_LS831
Des Moines, IA     Fri, Jan 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 :   .92 hgr   :   .53 hgr   :   .63 hgr   :   .04 lwr
Negotiated      :             :             :             :
CARCASS BASIS   : 40.25-62.40 : 42.50-62.40 : 40.25-62.40 : 45.00-61.00
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    58.50    :    60.35    :    60.47    :    54.35
--------------------------------------------------------------------------
Head Count      :   34,270    :   17,538    :   22,813    :   10,947
==========================================================================

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.

Jeremy Knutson
1-877-212-2564
jknutson@hurleyandassociates.com

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.

 Jeremy Knutson
1-877-212-2564
jknutson@hurleyandassociates.com

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.

 Jeremy Knutson
1-877-212-2564
jknutson@hurleyandassociates.com

CORN - March '09 Electronic
Open - $3.64 3/4, High - $3.69 1/2, Low - $3.58 3/4, Close - $3.66 1/2 UP $.04

Corn showed signs of optimism in the overnight trade but by the time we opened the day session it seemed as though the optimism faded.  The market was trading higher than where it opened at 10:30 a.m. CST so that would indicate a good chance the market would close higher than the open which it did.

The March '09 contract made an attempt to test the number I mentioned Monday afternoon, $3.54 but we only got as low as $3.58 3/4.  We also settled near the $3.68 number I spoke of on Monday but settle just shy of it at $3.66 1/2.  The action today has the feeling of bottom searching; we neared the 50% retracement level and held support as well as rallied.  If we continue to close above $3.53-.54 I will look for the market to make another rally attempt.

Bottom line - The feeling I get after today's action is we will continue to move higher in the overnight session.  The first area of resistance is $3.69, then $3.71 and all the way up to $3.79 1/4 although $3.79 1/4 is a big stretch and I don't think we will get there.  We need to continue trading above $3.69 for a period of time before I get excited about $3.79 1/4.  I do think we will see some buy stops above today's high of $3.69 1/2 either tonight or tomorrow.  I'm looking for follow-through positive trade tomorrow.

MEAL - March '09 Electronic
Open - $295.70, High - $300.70, Low - $293.50, Close - $297.00 UP $2.00  

I said Monday I thought March '09 meal could test $278.20 to $268.00 and we have only gotten as low as $292.40 since Monday's down limit day.  I must say it is somewhat confusing to me.  I am still holding on to a cautious approach to March '09 meal because even though it closed higher today it hasn't done anything on the charts to make me change my opinion.  

If March '09 gets on a roll to the upside for some reason we should see good resistance at $308.00 on the daily charts.  I think this area will stop a rally if one develops from short-covering from Monday's selloff. The market seems firm because it isn't breaking like it looks like it should but I am not bullish here.

Bottom line - if the market decides to continue moving higher tonight which I think it will, we should see near-term resistance at $297.90 and $300.70.  We can't seem to break away from the $300.00 level in either direction.    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.

HOGS - April '09 GLOBEX
Open - $67.25, High - $67.30, Low - $64.27, Close - $66.70 DOWN $.57.

I said on Monday I thought we were too close to the contract low of $66.57 in the April '09 contract to not test it.  The market did it in full force today!  We traded down limit in the April '09 Globex contract and slowly found support and rallied back for the balance of the day.  I also said I didn't want to hedge unless we close the week below $66.57 and I need to wait two days to find out if I need to employ a strategy.  

Today's action looked very pretty on the daily chart.  We opened lower, tanked and then came screaming back to close out the day.  We also close above the previous contract low of $66.57 which was important to me.  The cash prices are higher this afternoon but cutout was down $1.64 but the market hasn't really sold off in after hours yet.  Today was the last day of the Goldman roll so the hog markets should get back to normal.  If we are in 2009 it is okay to use the word normal in conjunction with the markets right?  

Bottom line - I expect continued strength tomorrow but we may need to get the cutout number traded early in the session.  We could test $65.65 early in the session and then catch some support.  If we end up moving higher tomorrow I expect buy stops above today's high of $67.30 and should accelerate buying.  Higher cash and lower cutout isn't good for cash margins on the packing side so something has to give sometime.  Which will it be, cash or cutout?

NW_LS500
Des Moines, IA     Wed, Jan 14, 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 loins steady in light
test; butts mostly steady to firm; sknd hams 17-20 lbs steady, 20-27 lbs
2.00-4.00 lower; sdls bellies 14-16 lbs not established; lean trimmings steady
to firm. Trading slow to moderate, with light to moderate demand and mostly
moderate offerings.


-----------------------------------------------------------------
Loads PORK CUTS          :              88.0
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
-----------------------------------------------------------------------
01/14       104.0      56.21   76.32   58.50  38.17  94.58 40.07  66.17
Change :               -1.64    0.66    0.89  -5.87  -0.26 -5.55   0.90
-----------------------------------------------------------------------

NW_LS831
Des Moines, IA     Wed, Jan 14, 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 :   .34 hgr   :   .46 hgr   :   .57 hgr   :   .86 hgr
Negotiated      :             :             :             :
CARCASS BASIS   : 43.00-62.84 : 44.00-62.84 : 43.00-62.84 : 44.00-59.46
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    58.10    :    59.54    :    59.79    :    54.78
--------------------------------------------------------------------------
Head Count      :   28,764    :   15,627    :   19,070    :    9,506
==========================================================================

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.

Jeremy Knutson
1-877-212-2564
jknutson@hurleyandassociates.com

The USDA provided the market with some bearish news today.  The USDA projected 2008/09 US Corn carryout at 1.790 vs 1.474 in December 2008, this is a gain of 316 million bushels.  Most of the increase in carryout came from a decrease in demand in the form of ethanol (100mb), feed (50mb), exports (50mb) and other factors.  The USDA dropped their projected price range $.10 on the both the high and low sides.

In last week's comments I talked about the market giving me warning signs from the previous week and the same went for last week.  The market did very little last week from an open to close perspective which again is a warning signal.  I protected my long call positions on Friday by selling an at-the-money March call and buying an out-of-the-money February call for a $.20 credit.  I entered that position to help my current call position in the event we had a negative report today which is exactly what happened.  I actually made $.05 on the overall position today and I will look for opportunities to adjust this in the near future.  We are completely open to the downside because we own $4.00 calls in February.  We converted our long futures positions to calls on the 29th of December to preserve the equity we gained in our futures positions.

Bottom line - I expect corn to gap lower tonight and move lower for the first part of trade and then find support as the evening progresses.  I don't expect limit down tonight and if it does I am a buyer on a short-term basis.  It looks like the market could easily test $3.68 and even down to $3.54 in the near future.

MEAL 
Open - $314.30, High - $321.50, Low - $294.50, Close - $294.50 DOWN $20.00 - Limit.

March '09 meal held in there quite nicely during the early portions of the day but fell to limit lower around noon and couldn't rebound from there.  I said last week that I didn't like the meal market unless we closed above $305.70 which we did on Friday afternoon but today would have been the deciding factor of whether or not to enter the market.  I actually purchased some $300.00 February '09 puts to cover some long futures positions I have on.  This was in the event of a negative report this morning.

Bottom line - I expect a gap lower opening tonight along with the corn and soybean market.  I expect the March '09 meal contract to move lower for a period and then find some support as the session progresses.  We had a key reversal today in the March '09 contract and I expect a test of $278.20 to $268.00 at some point in the near future.  Expect weakness early tomorrow and then settle in for steady to improved trade.

HOGS
Open - $68.50, High - $68.60, Low - $67.22, Close - $67.35 DOWN $1.25.

I have now turned my focus to the April '09 hog contract and it will be the hedge month in which most of my comments will refer to.  $66.57 is the contract low for April '09 and the market looks poised to test it being it isn't far away.  I look for some support at $66.57 but if we close a day below this level we could see more selling come into the market.  The cash and cutout market has been firming as of late but still has ground to make up to catch futures.

I am currently un-hedged in hogs and will be watching the $66.57 area closely and if we close below this level for the week then I will look into some hedge strategies by way of options.  I would use options because I am still not bearish the market and have been patiently waiting in the wings for a nice rally to sell.  I continue my wait.

Bottom line - I am not sure we will test $66.57 tomorrow because of the way my intra-day charts look.  I expect a test of this number but I don't think tomorrow is the day to do it.  It looks to me as if the market will trade better tomorrow and possibly up to $68.55 which may come later in the day.  I look for early lows tomorrow and highs to come later in the day.

NW_LS500
Des Moines, IA     Mon, Jan 12, 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 1/4" trim loins weak to
1.00 lower; butts generally steady; sknd hams 17-23 lbs not tested, 23-27 lbs
2.00 lower; 14-16 lbs not established; lean trimmings generally steady. Trading
slow to moderate, with mostly light demand and light to moderate offerings.



-----------------------------------------------------------------
Loads PORK CUTS          :              49.5
Loads TRIM/PROCESS PORK  :              30.0
-----------------------------------------------------------------

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
-----------------------------------------------------------------------
01/12        79.5      58.93   76.14   56.54  40.71  94.73 51.24  65.59
Change :               -0.12    0.27   -0.05  -0.69    unc -0.26  -0.49
-----------------------------------------------------------------------
 

NW_LS831
Des Moines, IA     Mon, Jan 12, 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 :   .73 hgr   :  1.99 hgr   :  1.94 hgr   :   .51 lwr
Negotiated      :             :             :             :
CARCASS BASIS   : 43.50-60.81 : 43.50-60.81 : 43.50-60.81 : 44.00-56.76
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    56.50    :    58.49    :    58.65    :    53.06
--------------------------------------------------------------------------
Head Count      :   24,946    :   11,998    :   14,888    :    9,048
==========================================================================

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.

Jeremy Knutson
1-877-212-2564
jknutson@hurleyandassociates.com

CORN
Open - $4.24 1/4, High - $4.27, Low - $4.13 1/4, Close - $4.16 1/2 DOWN $.11.

March '09 corn took back most of the gains we had yesterday and fell more than I expected.  Crude Oil was under pressure today because of larger supply than what was expected and traded close to $5.00 a barrel lower throughout the day.  The Dow Jones was around 150.00 points lower or worse though most of the day as well; the only positive item for grain prices was the U.S. Dollar Index down around 100 points. 

March '09 corn had an inside day today meaning today's highs and lows were inside of yesterdays range of highs and lows.  The general thought of an inside day is that the market will move in the direction of a breakout of the inside day.  I mean if the market makes new highs tomorrow above today's high of $4.27 then we should see some follow through to the upside, conversely if the market makes new lows below today's low of $4.14 1/4 then we could see some acceleration to the downside.    

Bottom line - It feels like we could have more follow through selling tomorrow but we are up against some intra-day support around $4.12 1/4 to $4.15 1/2.  If the market doesn't hold these levels then we could drop to $4.02 for a test of that level but I don't think we will get down that far.  I look for lower trade early tonight (maybe make new lows) and then firm as the evening progresses and probably test $4.17 1/2-.18 1/2 and we also left a gap at $4.23 that needs to be filled at some point.  I am not looking for a collapse tomorrow but I will go with the direction of the breakout of either today's high or low, my gut tells me we will trade mixed to higher tomorrow but the highs will be later in the day.

MEAL
Open - $300.40, High - $303.50, Low - $295.20, Close - $295.50 DOWN $5.50.

March '09 meal moved lower today in line with most of the Ag complex.  I had support today for March '09 corn at $300.00 and $298.60 which we went right though and finally bottomed out at $295.20.  I said yesterday that I have a hard time getting bullish at these levels unless we close above $305.70 which we have failed to do.  We are also back below the $300.20 I talked about the past couple of days.  The market has only close above $300.20 once (yesterday) in the last seven trading days (today included) but has traded above this level every day.  Hmmmm.

As I have mentioned before, we had a warning signal on the weekly chart last week and I am still sticking to my thought of caution at these levels unless we close above $305.70 for a couple of days.

Bottom line -  I think we will open lower tonight and then firm as the evening progresses.  We had a big selloff in Crude Oil while the Ag markets were closing and provided some pressure to the Ag commodities.  From a longer-term view it feels like the meal market looks top heavy and that we could see a retracement back toward $271.40 IF we do not close above $305.70.  Again, I am not bullish up here.

HOGS
Open - $64.50, High - $65.30, Low - $63.35, Close - $63.55 DOWN $.40. 

I said yesterday that I thought we would have an early high and a late low today and that is how the trade reacted today.  The high came within the first few minutes of trade today during the 9:05-13:00 trade hours and the low was made in the second hour of trade.  I am still not bearish Feb '09 hogs here although I think they could reach $63.35 to $62.60 before we catch some support.

As I said yesterday we had a lot of the $2.54 higher cutout number factored in to yesterday's trade so this morning was a trap for those that wanted to "get in on the action" of better fundamental news.   The cutout came in $1.13 lower today which helped the market selloff like it did.  

Bottom line - I look for the Feb '09 contract to be weaker early tonight and even tomorrow but like I said above I believe we will catch some support around $62.60 and then hold for a bit.  I look for lower trade tomorrow in the early going and then firm as the day progresses.  Tomorrow's trade will give us some good detail on whether the Feb '09 will reach the $67.05 area that I have been looking for.  

NW_LS500
Des Moines, IA     Wed, Jan 07, 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 loins weak to 4.00 lower;
butts steady to 1.00 lower; sknd hams 17-20 lbs firm, 20-23 lbs steady, 23-27
lbs not tested; sdls bellies steady to weak; lean trimmings not tested. Trading
slow to moderate, with light to moderate demand and mostly moderate offerings.



-----------------------------------------------------------------
Loads PORK CUTS          :            111.25
Loads TRIM/PROCESS PORK  :
-----------------------------------------------------------------

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
-----------------------------------------------------------------------
01/07       111.3      57.03   74.76   55.98  43.38  94.51 43.80  66.39
Change :               -1.13   -1.99   -1.60  -0.02   1.44 -1.51  -1.07
-----------------------------------------------------------------------

NW_LS831
Des Moines, IA     Wed, Jan 07, 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 :  1.26 hgr   :  1.60 hgr   :  1.45 hgr   :   .96 hgr
Negotiated      :             :             :             :
CARCASS BASIS   : 41.00-57.43 : 42.00-57.43 : 42.00-57.43 : 41.00-55.41
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    53.76    :    54.86    :    54.82    :    51.67
--------------------------------------------------------------------------
Head Count      :   28,723    :   14,640    :   19,122    :    8,981
==========================================================================

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.

Jeremy Knutson
1-877-212-2564
jknutson@hurleyandassociates.com

Corn had another positive day of trade closing $.16 1/4 higher on the day.  I said yesterday the market created a warning signal last week if you were long the market but it wasn't a sell signal.  I also said there was a potential sell signal at $4.15 on a sell stop which would have been triggered today but the high was $4.18 1/4 when it would have filled and a buy stop loss would have been placed at $4.19 1/4 and we obviously would have been stopped out.  I didn't take this trade because it all happened in the first hour of trade which I try to avoid if I can.

I said if we continue to trade/close above $4.04 in the March '09 contract that we could see a test of $4.23 3/4 in the near future.  Today was that day so now my number is $4.23 3/4, if we continue to trade/close above this number particularly on Friday then I think our next quick target is $4.36 1/2 then $4.50 and finally up to $4.77.

Bottom line - I think we will open unchanged to higher tonight and make an early high in the overnight trade.  We may test the high of $4.29 but I think we should also test $4.23 3/4 and even $4.22 1/2.  I believe we will make early highs tomorrow and then fade the balance of the day and keep in mind $4.23 is a key area for now to keep the March '09 contract trending higher.  I am still holding my calls for feed corn and will do so until the market tells me differently.

MEAL
Open - $298.60, High - $305.00, Low - $296.20, Close - $301.00 Up $2.80.

I said yesterday we had a warning signal in March '09 meal from the previous week.  I also said I thought we could test $296.30 and our low was $296.20 early last night.  I would still like to see the March '09 meal close above $305.70 before I jump back in the friendly camp again.   There was good support around $300.00 in the March '09 contract today and we finally closed above $300.20 which we have failed to do during the last five trading sessions.

I am looking for support at $300.00 tonight and tomorrow but if that is breached we could test $298.60 however I am looking for $300.00 to hold tonight.  I am having a hard time getting bullish up here without getting a close above $305.70 so I will remain cautious about my long position here until I see some signs of commitment to the upside.

Bottom line - I look for a test of $300.00 and possibly $298.60 tonight but then find support and firm up.  $305.00 will be the upside target tomorrow with the ultimate prize being at $305.70 however I don't think we will get this high tomorrow.  I am looking for a mixed market in meal tomorrow as it looks for direction from soybeans.  

HOGS
Open - $62.775, High - $64.20, Low - $62.70, Close - $63.95 Up $1.275.

It didn't take much for Feb '09 hogs to take back all of yesterday's losses and add more gains today.  I am holding with my opinion that the Feb '09 contract can reach $67.05 in the near future but we will need to stay above $63.95 for me to be confident.  Today we closed right at $63.95, the 62% retracement back to the $67.05 high.  

I am going to hedge in April '09 instead of Feb '09 when the time comes because I believe it will be a better contract to hedge in this point forward as a result of my studies.  Again, at this point I am not bearish the market but will change my mind in a hurry if the market tells me to.  The cutout was $.80 higher last night and helped spark some buying today as we traded firmer most of the day.

Bottom line - I expect hogs to open higher tonight/tomorrow and rally some but make an early high and a late low.  Cutout was up $2.54 today so it looks like the market should be strong again tomorrow however I believe some of the gains today were in anticipation of tonight's cutout number. 

NW_LS500
Des Moines, IA     Tue, Jan 06, 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 steady to weak;
butts generally steady; sknd hams 17-20 lbs steady, 20-23 lbs not tested; 23-27
lbs firm; sdls bellies mostly 2.00-5.00 lower; lean trimmings steady. Trading
slow to moderate, with light to moderate demand and offerings.



-----------------------------------------------------------------
Loads PORK CUTS          :            115.13
Loads TRIM/PROCESS PORK  :              13.0
-----------------------------------------------------------------

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
-----------------------------------------------------------------------
01/06       128.1      58.16   76.74   57.58  43.40  93.08 45.30  67.46
Change :                2.54   -0.06    1.18   6.99  -0.35  8.36  -2.58
-----------------------------------------------------------------------

NW_LS831
Des Moines, IA     Tue, Jan 06, 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 :  1.37 hgr   :  1.74 hgr   :  1.54 hgr   :   .95 hgr
Negotiated      :             :             :             :
CARCASS BASIS   : 40.50-56.50 : 40.50-56.50 : 40.50-56.50 : 41.00-54.05
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    52.50    :    53.37    :    53.46    :    50.74
--------------------------------------------------------------------------
Head Count      :   25,279    :   13,748    :   16,373    :    8,446
==========================================================================

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.

Jeremy Knutson
1-877-212-2564
jknutson@hurleyandassociates.com

CORN
Open - $4.12 1/4, High - $4.16, Low - $4.02, Close - $4.11 1/4 Down $.01.

Corn has traded sideways to higher since I last blogged.  March '09 corn had a daily reversal on Dec 29th but failed to get any downside activity going.  We have yet to make new highs above $4.23 3/4 which was set on Dec 29th, but the market seems like it wants to get there.  

We had a wild first hour of trade today; we were all over the place.  The trade range for March '09 corn was $.09 but only close 1/4 cent higher than where it opened at 9:30 A.M. CST.  Technically the first hour was friendly and held the market firm for the balance of the day, actually trading higher for awhile.  

The weekly chart showed me signs of caution if you are long the market. It didn't say sell, it just said be careful if you're long.  $4.04 is the 50% retracement level of last week's trade range and therefore support.  If the market continues to close above $4.04 then I would suspect a test of $4.23 3/4 at sometime in the near future.  If the market doesn't stay above $4.04 and closes below this level on Friday then I would say we could retrace back down to $3.64 in the March '09 contract.

Bottom line - I want to be very cautious up here based on last week's trade action.  It looks like we could be lower early tonight and have early lows tomorrow, but I feel tomorrow should be an up day in the March '09 corn.  I do have a potential sell signal at $4.15 stop tomorrow. First the market needs to make new highs above $4.16 and then come back down from there, creating the sell signal.  If I were to sell at $4.15 on a stop order I would have a buy stop loss above the current high when my order filled.  I have $4.00 call options in place for upside feed coverage which were converted from long futures we had on last month. 

MEAL
Open - $302.10, High - $302.10, Low - $296.50, Close - $298.20 Down $2.00.

I see a warning signal on the weekly chart for March '09 meal which is the same warning signal I saw in the March '09 corn.  Today was the first time we have taken out a previous day's low since the day of the contract low at $235.00 on Dec 5th, 2008.  This doesn't mean the market is going to fall apart but it does show some signs of uncertainty.  The March '09 meal contract has traded above $300.20 four of the last five trading sessions and has yet to close above this level. 

There is still talk of dry conditions in South America which is lending some support to the soybean complex but the market seems to have trouble with this $300.00 area.  I am long around 40% of my needs at this point and will watch for the market to tell me to buy more or exit my long positions.  As of right now I am on the side of the market looking to tell me to exit positions more so than keep them however I don't have any sell signals yet.

Bottom line - I look for a test of $296.30 at some point but I think tomorrows low will be in the first half of the trade session.  I am looking for meal to be stronger tomorrow but I need to see a close above Friday's high of $305.70 before I become friendly the market again.  I am very cautious right now.

HOGS
Open - $63.95, High - $63.95, Low - $62.40, Close - $62.675 Down $1.175. 

February and April '09 hog contracts had a huge day on Friday closing near limit up for the day.  The weekly chart looks positive to me assuming we can hold $61.40 as support (50% of last week's move).  The Feb '09 contract can retrace back to the $61.40 level and be fine technically but if we close a day or two below that level then I would be paying more attention to the possibility of another test of contract lows.  

I am not negative hogs based on the weak dollar and a projected reduced number of hogs for 2009.  I am not looking to be short hogs at this point however I have the luxury of changing my mind before I post on this blog so do what is right for your operation not because of what you read.  I still think we can test the most recent high of $67.05 in the Feb '09 contract but we needed a breather after Friday's big move.  

Bottom line - I am looking for tomorrow to be a better day in the Feb '09 contract but we may see some weakness early first.  I am writing these comments prior to seeing the end of day cash and cutout report so this may change my opinion but the techs are telling me early lows tomorrow in Feb '09 hogs.  I am not hedged in hogs at this time but will change my mind at the drop of a hat if I see something that I don't like.  I am looking for the $67.00 area in Feb '09 and/or the $73.00 area in Apr '09.  It looks like the Apr '09 may be a better hedge than the Feb '09 after this week.

NW_LS500
Des Moines, IA     Mon, Jan 05, 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 1.00 lower; sknd hams 17-20 lbs 3.00 higher, 20-23 lbs 9.00 higher from
last quote, 23-27 lbs 3.00 higher; sdls bellies steady; lean trimmings steady
with last quote. Trading slow, with light to moderate demand and offerings.



-----------------------------------------------------------------
Loads PORK CUTS          :              59.0
Loads TRIM/PROCESS PORK  :              24.0
-----------------------------------------------------------------

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
-----------------------------------------------------------------------
01/05        83.0      55.62   76.80   56.40  36.41  93.43 36.94  70.04
Change :                0.80   -0.56   -0.45   4.86  -0.97  1.96   0.06
-----------------------------------------------------------------------

NW_LS831
Des Moines, IA     Mon, Jan 05, 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 :   .43 hgr   :   .18 hgr   :   .41 hgr   :   .80 hgr
Negotiated      :             :             :             :
CARCASS BASIS   : 40.00-55.55 : 40.00-55.55 : 40.00-55.55 : 40.00-53.38
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    51.27    :    51.65    :    51.95    :    50.10
--------------------------------------------------------------------------
Head Count      :   23,844    :   11,909    :   14,943    :    8,034
==========================================================================

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.