April 2010 Archive for The Lean Hog Perspective

If you have trouble viewing this page please visit the market commentary section of www.leanhog.net

___________________________________________________

Corn – was off to the races again this morning trading as much as .13 3/4 higher at one point.  Noon rolled around and corn couldn’t hold its gains as we backed off to only up around .05 on the day.  The action that we had on the chart today was a test of the 50% retracement back to the $4.02 high and we pretty much topped at that point.  It looks to me like we should see a continuation of the weakness tonight and most of the day tomorrow.

If we don’t close above $3.73 in the July ‘10 contract tomorrow then this weeks action would suggest we could see sideways trade for awhile.  Our upside targets for the SHORT-TERM is $3.77 3/4, $3.83 and $4.02.  If you have old crop corn to sell now would be a good time to place open orders to sell.  If you already own corn for feed and the market rallies now would be a great time to place good till cancel orders to buy puts where you got long but at a cheaper price than where it is today.

For example, lets say you bought July ‘10 corn futures at $3.60.  Lets say the $3.60 put option (opens your downside back up) settled at .13 3/4 today.  I would place an order to buy that $3.60 put at .05 so if the market rallies .20-.30 cents you should get a fill at the lower price and now you have unlimited downside again.  This is a good strategy if you hedge corn and exit the hedges when you buy the cash.  More aggressive folks may want to buy a put option at a higher strike price after the rally, it really depends on your situation.

The $3.55 buy signal in the July ‘10 contract is still in place and good for now.  The protective sell stop will be at $3.61 1/2 for tomorrow. 

Bottom line – The intraday charts suggest corn makes an early high tomorrow.  Now is a good time to buy call options on corn and buy cash hand to mouth until fundamentals change.

___________________________________________________

Meal – was lackluster at best today as we started the day trading better but couldn’t get a good rally going.  Nothing has changed from my comments yesterday.  See yesterday’s comments below.

Meal gained back some of the losses we had yesterday but nothing to make me think yesterday was a fluke.  I am of the opinion that meal is making a short-term top for the next 30 days or so and then we  can look for more direction.  Meal, like corn, still allows profits to be locked in on hog production.  Now is a great ti me to buy call options just like I said in corn and buy meal hand to mouth OR if you are worried about basis levels narrowing then buy the cash product and purchase puts.  Hogs are on slippery ground technically and could experience a sell off and if that happens the producer margins will shrink if corn and meal move higher.  Make business decisions.

Bottom line – The intraday charts suggest meal makes an early low tomorrow.

_____________________________________________________________

Hogs – June hogs were up early in the day today but that was about it as we traded near unchanged for most of the day until noon rolled around and we sold off.  I’ve been talking about the $83.75 area for the past couple of days and we got a challenge of that number today as we made a low of $83.65 but bounced back above $83.75 almost immediately.  The cutout was up over $1.00 this afternoon on decent volume for a Thursday so the extended afternoon session has June ‘10 hogs trading near even for today or up .775 for tomorrows trade, which ever way you want to look at it.

The June ‘10 contract is in really testing this $84.00 to $83.75 area and looking to break through to the downside.  Now, if we don’t get through to the downside then I think we get a mass of buying  and go back toward the contract high of $87.80.  I’m of the opinion that we still try and challenge the downside some more.  The U.S. Dollar Index was lower today and taking a breath after the big run up we’ve had this week as well as the Dow Jones rallied by 122 points on the day to take back some of its losses from earlier in the week.

The June ‘10 contract tried to rally early this morning as it make the session high during the first hour of trade and then fell to pieces for awhile until some buying surfaced.  According to a source on the floor the June ‘10 contract sold off with ease because of the lack of buyers and some fund selling before some of the buying came back into the market around $1.05 lower.  I said yesterday that the June ‘10 contract needs to stay above $83.75 for the week otherwise it could trigger some big selling below the market.

I’ve said my gut feeling was negative toward the Jun ‘10 contract and I’m still in that camp.  I would suggest having a contingency plan to sell if the market takes a nasty turn and keeps going.  If you don’t want to sell then at MINIMUM buy some put options or a known risk strategy should be used to protect profits as well as protect against any events that have the possibility of popping up like H1N1 proved to us last year.

Bottom line – The intraday charts suggest hogs make an early low tomorrow. 

_____________________________________________________________

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.

If you have trouble viewing this page please visit the market commentary section of www.leanhog.net

___________________________________________________

Corn – got a shot in the arm this morning when it was announced that China bought two cargos of U.S. corn.  There was excellent volume in the Globex July ‘10 contract today with around 188,000 contracts traded.   I said yesterday that there was a buy stop signal at $3.55 in the July ‘10 contract and I guess it was good after all, my assumption is that it wasn’t going to be.  If this signal follows its normal characteristics then we should see a volatile move higher and today would have been the first day of that move.  I still believe that any “good” rallies in the corn market will and should be met with producer hedging until we see something that changes the fundamental aspect of the market. 

The Chinese purchase may lead to other purchases down the road so we could build some enthusiasm around that but over all I’m still bearish the corn market longer-term and would look to sell rallies if I’m a corn producer and if I’m buying feed then I would purchase call options and buy corn hand to mouth until we get a game changer. 

Bottom line – The intraday charts suggest corn makes an early high tomorrow.  Now is a good time to buy call options on corn and buy cash hand to mouth until fundamentals change.

___________________________________________________

Meal – gained back some of the losses we had yesterday but nothing to make me think yesterday was a fluke.  I am of the opinion that meal is making a short-term top for the next 30 days or so and then we can look for more direction.  Meal, like corn, still allows profits to be locked in on hog production.  Now is a great ti me to buy call options just like I said in corn and buy meal hand to mouth OR if you are worried about basis levels narrowing then buy the cash product and purchase puts.  Hogs are on slippery ground technically and could experience a sell off and if that happens the producer margins will shrink if corn and meal move higher.  Make business decisions.

Bottom line – The intraday charts suggest meal makes an early low tomorrow.

_____________________________________________________________

Hogs – The June ‘10 contract tried to rally early this morning as it make the session high during the first hour of trade and then fell to pieces for awhile until some buying surfaced.  According to a source on the floor the June ‘10 contract sold off with ease because of the lack of buyers and some fund selling before some of the buying came back into the market around $1.05 lower.  I said yesterday that the June ‘10 contract needs to stay above $83.75 for the week otherwise it could trigger some big selling below the market.

If $83.75 holds as support then we could make a run higher towards the contract highs again but for now the test of $83.75 is in progress and if the market does get a weekly close below this number we could see some big technical selling surface.  I’ve been saying it for a long time, protect the profits that you can with either a mixture of hedges and options strategies or at minimum an option strategy to give you a floor.  The U.S. Dollar closed higher again today but the trade action was less than impressive after yesterday’s move.  The Dollar needs to close above at least 81.92 but preferably 82.24 on Friday in my opinion for us to see more upside in this market.

The cutout was lower by $.70 again today which is really nothing in comparison to how fast we moved higher but it is still lower and gives the idea that product could be backing off some over the near-term.   The futures market this evening is trading lower with reasonable volume as a result of the lower cutout number today.

The monthly Jun ‘10 hog chart is looking pretty ugly right now and would not give any warm fuzzy feelings going into May assuming we close at or below current levels by Friday, the end of April.  The Jun ‘10 contract needs to close above $83.75 on Friday or that will do major technical damage to the charts and would open up downside targets of $81.02 and $79.775. 

I’ve said my gut feeling was negative toward the Jun ‘10 contract and I’m still in that camp.  I would suggest having a contingency plan to sell if the market takes a nasty turn and keeps going.  If you don’t want to sell then at MINIMUM buy some put options or a known risk strategy should be used to protect profits as well as protect against any events that have the possibility of popping up like H1N1 proved to us last year.

Bottom line – The intraday charts suggest hogs make an early high tomorrow. 

_____________________________________________________________

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.

If you have trouble viewing this page please visit the market commentary section of www.leanhog.net

___________________________________________________

Corn – is having trouble getting any legs under it because the U.S. producers are planting at a blinding pace.  The intra-day charts suggest an early low today, which we got but we didn’t do much rallying from there. We are at a critical point in the Jul ‘10 contract as we closed below the previous reaction low of $3.55.  If the Jul ‘10 contract closes below $3.55 again tomorrow I think we could be looking at another leg lower in this market.  $3.55 is also a buy stop signal for tomorrow and in order for that signal to be good the July ‘10 would need to close above $3.55.  I wouldn’t bet the farm on it.

Corn is at a price that allows hog producers to be profitable so if you are locking in profits you should be locking in corn as well.  I still recommend buying a call option in the month you need the corn and buy cash corn hand to mouth. 

Bottom line – The intraday charts suggest corn makes an early low tomorrow.  Now is a good time to buy call options on corn and buy cash hand to mouth until fundamentals change.

___________________________________________________

Meal – I said yesterday that it looked like the May ‘10 contract was nearing a top and it proceeded to sell off today.  As mentioned yesterday I do have a cycle high that was projected for today and has the meal market moving lower into the middle of May.  Meal, like corn, still allows profits to be locked in on hog production.  Does it make sense to speculate on meal prices moving lower especially after the last couple of years?  I don’t think it is wise, I say buy call options just like I said in corn and buy meal hand to mouth OR if you are worried about basis levels narrowing then buy the cash product and purchase puts.

Bottom line – The intraday charts suggest meal makes an early low tomorrow.

_____________________________________________________________

Hogs – I think the steam engine that was the hog rally is beginning to slow.  The cutout was down $.88 today on good volume yet the cash was up strong as well therefore cutting into the packers lucrative margins.  The Jun ‘10 contract was strong most of the morning until the noon USDA cash report was released showing cash hogs significantly higher.  The market rallied slightly and then almost crashed showing Jun ‘10 only $.05 higher at one point. 

The Dow Jones took a kick to the head today closing down 213 points and the U.S. Dollar Index responded with a rather violent move higher.  The dollar index is getting into an area now where if we begin to close above 81.92 for a couple of weeks then we could see a test of 83.73 and then 86.00 and ultimately 89.62.  If the dollar does rally like the longer-term monthly charts suggest it could, then we could slow some of our export demand.  The dollar still needs to get some good weekly closes before we need to worry about that though.

The monthly Jun ‘10 hog chart is looking pretty ugly right now and would not give any warm fuzzy feelings going into May assuming we close at or below current levels by Friday, the end of April.  The Jun ‘10 contract needs to close above $83.75 on Friday or that will do major technical damage to the charts and would open up downside targets of $81.02 and $79.775. 

I’ve said my gut feeling was negative toward the Jun ‘10 contract and I’m still in that camp.  I would suggest having a contingency plan to sell if the market takes a nasty turn and keeps going.  If you don’t want to sell then at MINIMUM buy some put options or a known risk strategy should be used to protect profits as well as protect against any events that have the possibility of popping up like H1N1 proved to us last year.

Bottom line – The intraday charts suggest hogs make an early high tomorrow. 

_____________________________________________________________

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.

If you have trouble viewing this page please visit the market commentary section of www.leanhog.net

___________________________________________________

Corn – It looked like we were going to rally this morning on talk that China bought three cargos of U.S. Corn.  This rally was short lived.  Once the idea of U.S. corn exports to China dwindled, so did the market.  NASS released their weekly crop progress report and pegged the U.S planting progress at 50% vs. 20% last year and 22% on the five year average.  Needless to say this will not be friendly to the trade, however, I do believe it was expected.

I don’t have much to add to what I’ve been saying for the last few weeks, I thought corn would be supported through the end of April and we are near that point.  If you have sold hogs you should at minimum buy corn calls and buy cash corn hand to mouth until we see a significant change in the fundamental picture. 

I’m looking for the corn market to be its strongest on the open and then fade tomorrow as we come off of a nice little rally today.

Bottom line – The intraday charts suggest corn makes an early low tomorrow.  Now is a good time to buy call options on corn and buy cash hand to mouth until fundamentals change.

___________________________________________________

Meal – It looks like the May ‘10 soybean meal contract is nearing a top.  I have a cycle high projected for this Wednesday an a similar situation applies to the July ‘10 contract.

Profits remain strong so it never hurts to buy calls to make sure you have a cap on your feed costs, I would suggest taking a look at calls for both corn and meal so you know what your ceiling is for feed costs.

Bottom line – The intraday charts suggest meal makes an early low tomorrow.

_____________________________________________________________

Hogs – June ‘10 hogs had an off day on Friday and followed through with that thought today.  There were mixed items in the news on Friday, some say short covering was the reason for the sell off and there was also another story out there that said the Japanese had found a needle in a loin product that originated in the U.S.  The needle story was never verified or at least to my knowledge.

Either way it should bring some folks back to earth and curb the thinking that this market is too good and nothing can stop it!  It was a good reality check.  The June ‘10 contract is now below the $86.00 key level of support and if it continues to trade below $86.00 for a couple more days and more importantly trade below $84.00 we could see additional selling show up.  It sounds like there was heavy volume on the sell off on Friday but once we were near limit lower the buyers came out in droves.

I said last week that if we closed above $86.00 for two consecutive days we could see another leg higher in the June ‘10 contract based on the technical aspect of the market.  I also said that my gut feeling was still negative and I’m still in that camp.  I would suggest having a contingency plan to sell if the market takes a nasty turn and keeps going.  If you don’t want to sell then at MINIMUM buy some put options or a known risk strategy should be used to protect profits as well as protect against any events that have the possibility of popping up like H1N1 proved to us last year.

Bottom line – The intraday charts suggest hogs make an early low tomorrow. 

___________________________________________________

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.

If you have trouble viewing this page please visit the market commentary section of www.leanhog.net

___________________________________________________

Corn – gained back nearly half of what it lost in yesterday’s trade.  Today’s action did nothing to take away from the concern the market left us with yesterday with the large downward move.  We still need to hold support at $3.43 1/2 if we want to take a shot at higher prices.  Now the market will gather its buyers and sellers and probably get some momentum in the direction of a breakout below $3.43 1/2 or above $3.65.  I’ve said for the last few weeks that I’m friendly corn until the end of April and I’m still in that camp.

Weather doesn’t look like it is going to be an issue this year for planting.  My belief was we would see some optimism in the market due to a rain delay in planting but when you can knock out as many acres in a day as we can now; it doesn’t take very many dry days to get a comfortable amount of the crop planted.

I am still friendly May ‘10 corn unless we get two consecutive closes below $3.43 1/2, then I think we could make another leg lower toward $3.25.

Profits remain excellent and one should keep business ahead of emotion and make an effort to protect your profits with a known risk strategy.

Bottom line – The intraday charts suggest corn makes an early high tomorrow.  Now is a good time to buy call options on corn and buy cash hand to mouth until fundamentals change.

___________________________________________________

Meal – I said yesterday that my guess is that we would make a new high above $284.30, which we did, and now we are targeting the $289.00 number in the May ‘10 contract.  Today’s high was $287.80 and the intra-day charts look like we could see an early high tomorrow so I’m not sure tomorrow will be the day we touch it.  As I’ve said before, if we get two consecutive closes above $289.00 then we could see a quick test of $300.00 in the May ‘10 contract.

No changes here, profits remain strong so it never hurts to buy calls to make sure you have a cap on your feed costs, I would suggest taking a look at calls for both corn and meal so you know what your ceiling is for feed costs.

Bottom line – The intraday charts suggest meal makes an early high tomorrow.

_____________________________________________________________

Hogs – I said yesterday that I felt we needed a good run above $86.00 in the June ‘10 contract or we could see a failure and start moving lower.  We closed below $86.00 today and if we close below it again tomorrow then I think this test of $86.00 was just that, a test and we move lower from here.  Cash and cutout were strong once again today and on good volume.  This isn’t necessarily un-expected during this time of you due to good planting weather for hog farmers that produce crops as well.

We got our early high today and drifted from there and it looks like tomorrow will bring an early low and firm as the day progresses.  In my gut I’m still bearish but technically I need another close tomorrow below $86.00 to confirm it.  I believe with the good cash and cutout number from today we should see a firmer market tomorrow but if we can’t get a big rally going then I’m even more in the camp of a top is near. 

for the last couple of weeks that I’m negative to June ‘10 hogs.  I still am from a gut feeling perspective but we did close two consecutive days above $86.00 which I said I needed to turn friendly the hog market.  I could make an argument for being friendly if we had a big close above $86.00 but we are just hovering around this area.  I think the market needs to make a nice run higher to get more buying interest in the market otherwise this may be a failure and start a move lower.

At MINIMUM put options or a known risk strategy should be used to protect profits as well as protect against any events that have the possibility of popping up like H1N1 proved to us last year.

Bottom line – The intraday charts suggest hogs make an early high tomorrow. 

___________________________________________________

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.

If you have trouble viewing this page please visit the market commentary section of www.leanhog.net

___________________________________________________

Corn – Corn planting progress for the Nation came in at 19% (2004 was the record for this time of year at 20%) compared to 5% last year at this time and a five year average of 9%.  This news confirms today’s action in the corn mark et as we sank just over $.16.  I said last week that I was expecting a test of $3.63 to $3.76 and $3.65 was our high for the move.  I must admit I thought we were going to see $3.76 but today threw a kink in that plan. 

Today wiped out the last four sessions of gains in the May ‘10 contract and if you are a hog producers that isn’t all bad!  It seems as if the market wants to test the recent low of $3.43 1/2 one more time before deciding on whether we have a short-term bottom in place or not.  I’ve said for a few weeks now that I am friendly the corn market through the end of April and my cycle indicator still suggests it to be true.  I am of the same camp unless we get two consecutive closes below $3.43 1/2, then I think we could make another leg lower toward $3.25 basis the May ‘10 contract

Profits remain excellent and one should keep business ahead of emotion and make an effort to protect your profits with a known risk strategy.

Bottom line – The intraday charts suggest corn makes an early high tomorrow.  Now is a good time to buy call options on corn and buy cash hand to mouth until fundamentals change.

___________________________________________________

Meal – I said last week that if we closed above $274.60 on Friday that we could be on our way to $283.30 and our high today was $284.10.  I also said our next target above $283.30 is $289.00.  We are at a crucial, we need to either trade above $284.30, which should kick in some additional buying power from a technical perspective, or we back off toward $272.50.  My guess is that we make a new high above $284.30 then test the $289.00 and make a run for the $300.00 level in the  near future. 

No changes here, profits remain strong so it never hurts to buy calls to make sure you have a cap on your feed costs, I would suggest taking a look at calls for both corn and meal so you know what your ceiling is for feed costs.

Bottom line – The intraday charts suggest meal makes an early high tomorrow.

_____________________________________________________________

Hogs – I said for the last couple of weeks that I’m negative to June ‘10 hogs.  I still am from a gut feeling perspective but we did close two consecutive days above $86.00 which I said I needed to turn friendly the hog market.  I could make an argument for being friendly if we had a big close above $86.00 but we are just hovering around this area.  I think the market needs to make a nice run higher to get more buying interest in the market otherwise this may be a failure and start a move lower.

Keep in mind, I’m a risk manager and I see the profits that are available to producers and it makes good sense for those profits to be protected to ensure a good fiscal year in 2010 and some of 2011.  Objectively my technical opinion is as long as we hold $86.00 in the June ‘10 contract we should make another move higher.  My personal feeling based on other things that I look at and read into is still on the cautious to negative side.  I suggest making decision while you are still in control vs. trying to make them when you are at the mercy of the market.

At MINIMUM put options or a known risk strategy should be used to protect profits as well as protect against any events that have the possibility of popping up like H1N1 proved to us last year.

Bottom line – The intraday charts suggest hogs make an early high tomorrow. 

___________________________________________________

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.

If you have trouble viewing this page please visit the market commentary section of www.leanhog.net

___________________________________________________

Corn – Not much has changed from yesterday, no major accomplishments were made on the charts today and I’m still friendly to corn through the end of April.  I’m expecting a test of $3.63 to $3.76 in the May ‘10 contract.  If we can get above $3.76 and close there for two consecutive days then we could make a run at $3.89 but I’m not holding my breath for that target.  Profits remain excellent and one should keep business ahead of emotion and make an effort to protect your profits with a known risk strategy.

I’m looking for the corn market to be its strongest on the open and then fade tomorrow as we come off of a nice little rally today.

Bottom line – The intraday charts suggest corn makes an early high tomorrow.  Now is a good time to buy call options on corn and buy cash hand to mouth until fundamentals change.

___________________________________________________

Meal – If we close above $274.60 again tomorrow I would say we are on our way to challenge the most recent high of $283.30 and then up to $289.00 from there. If we get above $289.00 then we could see some additional good buying kick in above those levels.

I still believe we will see firm prices as we move through April and then we could see a correction develop after that.  I think the $283.30 level is a safe bet as an area of resistance the market will want to test in the near future.  Watch for a close above $274.60 tomorrow!

Profits remain strong so it never hurts to buy calls to make sure you have a cap on your feed costs, I would suggest taking a look at calls for both corn and meal so you know what your ceiling is for feed costs.

Bottom line – The intraday charts suggest meal makes an early high tomorrow.

_____________________________________________________________

Hogs – I have been negative to June hogs for about two weeks now and the market has been stubborn and standing firm based on good cutout and cash hog numbers.  Yesterday I said I did have a buy signal show up at $84.00 stop and so far that signal has been good even though I thought it would fail.  With today’s action we matched our contract high of $85.90 would normally leave a double top but the overnight session made a new high at $86.05 and has since retreated. 

The action tonight triggers a sell signal at $86.00 stop with a protective buy stop at $86.75.  This is the same sell signal as we saw buy signal yesterday and if it is good the market can move violently in the direction of the signal.  I will continue to monitor two consecutive closes above $86.00 because that is what I need to happen before I change my opinion to friendly hogs.  As of now I’m still negative June hogs especially with the new sell signal tonight.  To put things in perspective, if you go back to 1997 and look at the last forty five marketing days left in the June hog contract you will not see one day close higher than today’s close of $85.475.

Today was the highest close June hogs have had at this time of year dating back to 1997.  Keep an eye on the cutout value as we are at new highs for the 2010 calendar year.  Below is a chart of the cutout loads year to date.

At MINIMUM put options or a known risk strategy should be used to protect profits as well as protect against any events that have the possibility of popping up like H1N1 proved to us last year.

Bottom line – The intraday charts suggest hogs make an early high tomorrow. 

___________________________________________________

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.

If you have trouble viewing this page please visit the market commentary section of www.leanhog.net

___________________________________________________

Corn – didn’t know which way to go today as we traded marginally higher for most of the day.  Today the USDA released its first weekly crop planting progress report this afternoon with no major surprises.  The corn crop is 3% planted vs. 2% last year and 4% on a five year average.  Because we DIDN’T close below $$3.43 1/2 last Friday I’m still of the opinion that the May ‘10 corn market has done enough to the downside for now.

The planting weather looks rather benign for the next couple of weeks according to the long range forecast for most of the corn belt.  We all know of fast forecasts can change but for now it looks non-threatening to spring planting progress.

My cycle indicator is still pointing higher for the balance of April and I would agree with it but again I think any reasonable rally could be met with good producer and professional selling.  Tomorrow I’m looking for the market to make an early low and trade sideways to higher tomorrow.

Bottom line – The intraday charts suggest corn makes an early low tomorrow.  Now is a good time to buy call options on corn and buy cash hand to mouth until fundamentals change.

___________________________________________________

Meal – I’m still of the opinion that the meal market will remain on solid footing till the end of April before we find a short-term top.  Today’s action was friendly as we closed above last week’s high in the May ‘10 contract and we continue to hold $260.00 as support.  Based on the way the market is acting it looks as if the May ‘10 contract may want to test the most recent high of $283.10 again in the near future.  I think this will be a target prior to the end of April.

Currently it looks as though the May ‘10 contract should continue to have a positive week (with some fluctuation of course) as it gravitates toward the probable target of $283.10.

Profits remain strong so it never hurts to buy calls to make sure you have a cap on your feed costs, I would suggest taking a look at calls for both corn and meal so you know what your ceiling is for feed costs.

Bottom line – The intraday charts suggest meal makes an early low tomorrow.

_____________________________________________________________

Hogs – Friday the June ‘10 hog contract had an ugly close as we barely held on to the gains for the week.  The weekly range was $2.025 but the market managed to keep $.50 of it in tact for the weekly gain.  The action last week has left the weekly chart looking like we had a spike high and a reversal to the downside is beginning.  If the market is indeed going to make a correction to the downside it will need to close two consecutive days below $83.875 to kick in additional selling.

The comments in blue are from last Thursday the 8th’s post but I thought it is relevant to leave it in this post.

Gaps are usually technical targets at some point but the ones left recently are a ways below the market the market and I don’t think we will fill the first gap at $79.775 but I do think the second gap at $81.025 has a chance to fill because it is at the same level as a 62% retracement back to our most recent low of $78.075.

I’m not friendly June hog futures right now and it is possible I may be alone in that camp but it’s what the charts tell me based on the information I look at.  The only way I become bullish June hogs is if we get a strong weekly close above $86.00 either tomorrow or next Friday.  If we don’t get a strong close above $86.00 then I’m looking for a correction back to $81.975 and $81.05 before we find good support.

Cutout continues to move higher but volume of loads is lacking.  We only had 22 loads today and not many at the end of last week either.  I am VERY skeptical of this market right now, however, a potential buy signal popped up today at $84.00 on a stop.  This signal is good for tomorrow only so I will watch it and update you in tomorrow’s commentary.  I’m still leaning toward the negative side of the equation and thinking this signal will end up being a false signal.

At MINIMUM put options or a known risk strategy should be used to protect profits as well as protect against any events that have the possibility of popping up like H1N1 proved to us last year.

Bottom line – The intraday charts suggest hogs make an early low tomorrow. 

___________________________________________________

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.

If you have trouble viewing this page please visit the market commentary section of www.leanhog.net

___________________________________________________

Corn – We gave back most of yesterday’s gains in the corn today and we had pretty good volume.  I said yesterday that I’m a short-term bull through the end of April and I’m sticking with that thought unless we close below $3.43 1/2 tomorrow, then all bets are off.  It looks as if the market has some downside remaining for tonight and early tomorrow but then that should do it for now based on hourly charts. 

My cycle indicator is still pointing higher for the balance of April and I would agree with it but again I think any reasonable rally could be met with good producer and professional selling.  Tomorrow I’m looking for the market to make an early low and trade sideways to higher tomorrow.

Bottom line – The intraday charts suggest corn makes an early low tomorrow.  Now is a good time to buy call options on corn and buy cash hand to mouth until fundamentals change.

___________________________________________________

Meal – Today gave back some of yesterday’s meal gains but didn’t do any technical damage to the charts.  I’m still of the opinion that the meal market will remain on solid footing till the end of April before we find a short-term top.

If the May ‘10 meal contract wants to continue to move higher then I would say we would need to close above $263.30 tomorrow.  If we do close above this level then we should see follow through to the upside next week.  The weekly charts are looking for support and so far its been holding the $260.00 level. 

Profits remain strong so it never hurts to buy calls to make sure you have a cap on your feed costs, I would suggest taking a look at calls for both corn and meal so you know what your ceiling is for feed costs.

Bottom line – The intraday charts suggest meal makes an early low tomorrow.

_____________________________________________________________

Hogs – I’m not sure how long I can continue to say we are seeing warning signals in June hogs without readers rolling their eyes but again, another warning signal today.  My opinion of June hogs hasn’t changed, I think we are going to get a break to the downside in this market in the coming weeks.

When the market moved higher as a result of the Quarterly Hog & Pig report, there were gaps left on the electronic chart which is very rare.  The Globex trades twenty three hours a day during the week so if we get news in the afternoon reports the market is still trading so it makes its move then before it closes at 4:00 pm CST therefore leaving little if any gaps.

Gaps are usually technical targets at some point but the ones left recently are a ways below the market the market and I don’t think we will fill the first gap at $79.775 but I do think the second gap at $81.025 has a chance to fill because it is at the same level as a 62% retracement back to our most recent low of $78.075.

I’m not friendly June hog futures right now and it is possible I may be alone in that camp but it’s what the charts tell me based on the information I look at.  The only way I become bullish June hogs is if we get a strong weekly close above $86.00 either tomorrow or next Friday.  If we don’t get a strong close above $86.00 then I’m looking for a correction back to $81.975 and $81.05 before we find good support.

Cutout was higher by $2.03 today and the overnight trade is marginally higher in the June contract with excellent resistance at $85.15.  Like I’ve been saying recently, now is the time analyze your operations profits and make business decisions to take some of this wonderful gift that we are getting!

At MINIMUM put options or a known risk strategy should be used to protect profits as well as protect against any events that have the possibility of popping up like H1N1 proved to us last year.

Bottom line – The intraday charts suggest hogs make an early high tomorrow. 

___________________________________________________

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.

If you have trouble viewing this page please visit the market commentary section of www.leanhog.net

___________________________________________________

Corn – As I mentioned yesterday, corn seemed to be running out of steam to the downside and today proved the thought true with more enthusiasm than I thought.  The big rumor on the floor today was China was going to import corn so it started a wave of short-covering which drove the market higher in a hurry.  After the close we find out that China didn’t necessarily say they were going to buy from the U.S. but everyone and their brother seems to be negative on corn so positions may have been over extended thus the short-covering rally.

The May ‘10 contract looks poised to test $3.67 in the near future and if we keep following through the next major target is $3.93 which was our high before our most recent decline.  We opened in a good position in the night session to continue follow through to the upside tomorrow, however, I think we should see an early high tomorrow and drift as the day progresses.  I’m a short-term bull for the time being and probably through the end of April as I see it.  I still believe any reasonable rallies will be met with good producer selling as well as the professional trader.  .

Bottom line – The intraday charts suggest corn makes an early high tomorrow.  Now is a good time to buy call options on corn and buy cash hand to mouth until fundamentals change.

___________________________________________________

Meal – The market closed at $263.10 yesterday which seemed close enough to get some follow through to the upside.  Today proved my statement that the $260.00 area in May ‘10 meal is probably low enough for the time being.  The time being is the balance of April in my mind.  I’m looking for higher market movement as we move through April but I’m not a long-term bull at this point as we need a fundamental shift to get fundamental optimism going.

Like corn, the meal market is providing good opportunities to lock in some of the best hog margins we’ve seen in years.  Now would be an excellent time to purchase some call options to protect against higher prices assuming a change in fundamentals down the road.   

Bottom line – The intraday charts suggest meal makes an early high tomorrow.

_____________________________________________________________

Hogs – I mentioned yesterday that hogs had given us warning signs of the market toping out four of the last five sessions and you can add today to that list now to make it five of six sessions.  I hate to say it but I’m getting ready to call a top in the market for the June ‘10 contract.  I did have sell signals for both October and December today and if these signals are good they suggest a violent move lower from here.  I don’t think the hog market is going to turn south and never look back, I just think we are due for a break and the market has been warning us recently.

We were sellers of the June, July and August contracts today and are putting more safe guards in place to get a lot more aggressive from now until the end of December 2010 should we get a sell off.  I don’t have a good feeling about the hog complex from a futures perspective but cutout and cash seem to be humming right along.  The news sunk in further today that the John Morrell packing plant in Sioux City, IA is closing its doors this Friday which is a week or two earlier than previously thought.  This put pressure on the noon markets as cash was around $3.50 lower from yesterday but of course by the end of the day we were less than a dollar lower. 

There are some in the industry that think the Morrell plant closing will be a non-event as the reduction in hog numbers and additional kill schedules from competing packers will consume the logical assumption of excess pigs for market which would pressure the cash market.  At this point I’m not sure which camp I’m in, I don’t believe it will be a non-event but I also don’t think it will be a long-term issue either.

Lets put the June contract into historical perspective dating back to 1997 and assuming around 45 marketing days left until expiration of the June futures.  Assuming 45 marketing days left until expiration, the June contract has never traded a day above today’s close from 1998 to 2009 but it closed above $84.60 ten times over the next 45 days in 1997 but the high was $85.30 which we topped today but closed below.  My point is that we are at the highest levels the June contract has ever been at this time of year dating back to 1997 so logic would say be careful, don’t get too bullish and make business decisions not emotional ones!  Take some profits!

At MINIMUM put options or a known risk strategy should be used to protect profits as well as protect against any events that have the possibility of popping up like H1N1 proved to us last year.

Bottom line – The intraday charts suggest hogs make an early high tomorrow.  Trade below $84.25 should trigger some sell stops and propel the market lower for short period during the day.

___________________________________________________

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.

Corn – May corn had a quiet day today but in doing so has shown signs of the market running out of steam to the downside.  My cycle indicator suggests that May corn should be making a low on April 6th and then moving higher into the end of April. 

The hog industry is providing some of the best profitability opportunities in recent history, therefore, buying calls to cap upside in corn is something that should STRONGLY considered.  There isn’t nothing at this time that suggests corn should rally hard but after the last couple of years of negative returns lets make sure we keep profits this year.

Bottom line – The intraday charts suggest corn makes an early high tomorrow.  Now is a good time to buy call options on corn and buy cash hand to mouth until fundamentals change.

Meal – May meal had a poor showing today as we closed the lowest level since the middle of March.  The May ‘10 contract closed below $263.30 and if we close below that again tomorrow then we could look for a test of $251.00 which was our low from March 15th, 2010. 

Like corn, the meal market is providing good opportunities to lock in some of the best hog margins we’ve seen in years.  Now would be an excellent time to purchase some call options to protect against higher prices assuming a change in fundamentals down the road.   

Bottom line – The intraday charts suggest meal makes an early low tomorrow.

Hogs – June ‘10 hogs closed at the highest level ever for the June 2010 contract.  The next level of good resistance is the high from the week of April 21st, 1997 at $86.60.  The June 1997 contract settled at $80.725 at its expiration.   

As I mentioned earlier in corn, the industry is showing some of the best profit opportunities in recent history.  A twelve month average per head profit (using a 5 year average basis for hogs) is around $18-$22 per head, these numbers of course vary according to individual input costs.  It is time to make some business decisions and protect what the market has already given you.  If you are comfortable with the profits within your operation then sell some production and put a cap on feed costs.  At MINIMUM put options or a known risk strategy should be used to protect profits as well as protect against any events that have the possibility of popping up like H1N1 proved to us last year.

Bottom line – The intraday charts suggest hogs make an early high tomorrow.  Coming off of the last couple of years of negative returns now isn’t the time to get caught up in a euphoric state and think the margins will improve forever!  TAKE SOME!

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.