I have learned over the years there are some guarantees and those guarantees are good times and not so good times, you should experience both.  The goal is to reduce the not so good times and get more toward the middle and not have extreme highs.  The extreme highs are what actually get people in trouble because of over-confidence and a sense of invincibility.  The market has a good way of keeping us from getting too big for our britches and we need those times to keep our discipline in check.  After all, perfection is the main ingredient for disaster.  I mean the easier it becomes to make money the more confident/cocky one can get and when we are too confident we can have big mistakes.  I am not solely talking about the commodity markets but also the stock market.  The perfect mortgage package to get almost anyone and everyone into a home with no money down, low interest and a payment that could be way over their heads became the PERFECT solution to any families mortgage needs.  This is how we got ourselves in this mess and let’s not fall prey to it ourselves.  

POLITICS
I am at a loss for words, I have been so short-term directionally wrong this week it isn't even funny.  I don't think I would have been as wrong had our friends in Washington gone ahead with the rescue plan they promised last Friday and over the weekend.  I am wondering what I am missing; the general thought is that Americans do not want this package to be passed.  I would agree, I don't think bailouts are the answer however we don't have a choice.  We are going to pay whether the Government writes the check or Wall Street nosedives and we experience the pain via our retirement plans, children's college funds, lost jobs, slowdown in business and the list goes on!  We don't have a choice in the matter, I believe everyone knows this deep down but it chaps me when our lawmakers play politics in times of crisis.

I must say, don't get used to the rally we had in the stock market today if Congress decides not to pass a plan.  We didn't rally because investors think we can make it through this tough time without some help, it is a rally based on the idea we will get a plan by Wednesday (tomorrow) as I understand it.  They couldn't pass a bailout plan so now let’s go for the rescue plan.  ; )

CORN  
Today was a rough day; I purchased put spreads against long futures from Friday to help out if the market continues to move lower.  I am not lifting any hedges at this time because the market can rally as fast as it fell apart; bottom line is we need to buy corn for feed.  We touched $4.85 3/4 today and I said yesterday $4.84 is a level of support.  I would like to say this was close enough today but I am not so sure.  If we close below $4.84 in Dec '08 corn (preferably two days close below) we could get to the $4.37 area which would be the next level of support.

I believe we will test $4.84 either tonight or tomorrow, we need to close above this level if we don't want the market to fall out of bed another $.50.  I am currently long the market with a put spread covering my downside exposure to the market.  If we close the market below $4.84 tomorrow look out below, it could be a swift move lower.  If you don't have coverage wait until we have a day where we close above a prior day high and buy calls.  I think the markets are still confused with what is going on in Washington D.C. and Wall Street.  These are the times where options prove their worth.

Bottom line - I am writing this as the overnight session trades and it is currently trading higher by $.08 and has been as high as $.11 1/2 higher tonight.  I thought we would see a test of $4.84 earlier rather than later but maybe it will be later or not at all?  If the market does stay firm we should have pretty good resistance at $5.05-$5.09.  I still feel like the market wants to test $4.84 to see if there are any sell stops below this level, if there are good stops then obviously we look for a push lower but if they test and there are no stops then we could rebound toward the $5.05-.09.  Longer-term (3-5 days) resistance is at $5.25-$5.30, we will need some good volume to get to these levels.

MEAL
Dec '08 meal closed down $16.00 or so today and well below the $300.00 level that I didn't think we would violate.  I have been saying it for some time that I didn't think we would get below $300.00.  Well, today we did.  Resistance tomorrow is going to be $293.30 to $295.60 and support will be todays low of $283.50 and then down to $268.00.  With all of the rescue plan talk for tomorrow and the possibility of the House passing it would/should be friendly to commodities just for the simple fact everyone should be euphoric on Wall Street and that optimism should carry over into the Ag sector.

The USDA quarterly stocks report was bearish because they gave a carryout number of 205 million versus the trade expected 140 million.  Explain this to me, how can the USDA find 1.1 million more acres in 2007 now almost a year later AND increase the yield from 41.2 to 41.7?   This is the largest ever one year revision which has a grand total of 91 million more bushels for 2007 crop that the USDA has been underestimating for a year!  I suppose in the October production report we are going to find out that JFK was never assassinated and Jimmy Hoffa is running a resort down in the Caribbean!  Okay, I know I am taking it too far but geez Louise! 

This is one of the main reasons why I hardly read what I will call regular news stories and I don't put a lot of stock in Government reports.  I have never done well by trying to position myself based on news or reports after the fact.  There are smarter people out there with better connections than I that seem to know this information before hand and it usually shows up in the charts which is what I use to make most of my decisions.  I have been successful over the years using this method (however this last two weeks has been a bugger) but I can guarantee you it isn't fool proof nor is it an absolute winner.  I will say it helps me stay objective but in an area like we are in now I am also hedging so I don't use the charts to trade because I think we are a value levels and we need to own corn and meal and also need to sell hogs therefore I am not afraid to hold a hedge position if we are in perceived value areas of the market.

Bottom line - We had a negative close in the market today after last night’s friendly opening which was looking pretty good at the 6:00 AM CST market close today but the report/USDA threw a different story at us to nullify any possible gains that were to be had today.  That is fine; it will happen now and again, it's what makes the market the market.  I think we could test todays low at some point but I think we will ultimately go in the direction of tomorrows proposed rescue plan vote in Washington D.C.

HOGS
Dec '08 hogs opened slightly better today rallied and then backed off, rallied then backed off and then sold off going into the close.  The cash and cutout market for the most part were steady.  It still seems like we are searching for a bottom in the Dec '08 contract but if we close the market below $64.00 we could see additional selling surface.  The U.S. Dollar Index was smoking hot today up over 200 points at one time which in my opinion held the hogs back today. 

It feels like the market wants to make another test run at the lows to see if they can find sellers but if they can't then I think we could make another run at $67.67 and see what is waiting for us above this level.  Again, like the rest of the Ag sector I think tomorrow all eyes will be on Washington D.C. and our lawmakers to see if they can knock out a rescue plan that will slow the bleeding and allow for confidence levels to increase.

Bottom line - I expect a better day tomorrow (like I said yesterday but got hammered toward the close today) and if we can sustain trade above $64.50 for an hour or two we should make a run toward $65.75 between tomorrow and Thursday.  Ultimately I will go with the direction of the rescue plan vote but my comments above are what the charts tell me regardless of vote.  

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
-----------------------------------------------------------------------
09/30        94.5      74.00   90.20   73.14  54.59  87.62 71.41  82.71
Change :               -0.32    0.63   -0.92  -0.02   0.28 -1.21  -0.51
-----------------------------------------------------------------------

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 :   .05 lwr   :   .02 lwr   :   .16 hgr   :   .61 hgr
Negotiated      :             :             :             :
CARCASS BASIS   : 60.00-74.00 : 60.00-74.00 : 60.00-74.00 : 60.25-71.00
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    69.92    :    71.03    :    71.18    :    67.87
--------------------------------------------------------------------------
Head Count      :   21,900    :   10,392    :   13,493    :    8,343
==========================================================================

Hog Comments - 09-29-08 - The Govt, a day late and $700 billion short.

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

CORN
I have to say I didn't expect this type of action today, if you don't believe me go back to my post from Friday, it should clarify things in a hurry.  I think I, along with many others were blind-sided by the House of Representatives this afternoon when they voted against the "bailout" plan.  I am not fundamentally for bailouts but I have to believe those with more information about the situation that we are using a "bailout" process because it is the lesser of two evils.  The other evil would be do nothing and let the market fend for itself.  Greed by few has gotten us into this mess and it is a dirty shame that everyone needs to pay for the mistakes of a minority our population.  

When I purchased my house I was presented the "opportunity" of having an interest only loan with the option of not even covering the interest payment with my monthly mortgage payment.  I said to the gentleman, so the worst case scenario is the interest rates go up, housing market crashes along with the stock market?  He answered yes that would be the worst case scenario but what are the odds.  I understood the concept but I didn't think it was very smart.  I didn't do business with that company and I went with a traditional loan at Wells Fargo who is one of the best banks out there today because they didn't get tangled up in all of this mess.  I wish I could say I saw this all coming but be a big liar, I just didn't think it was a wise situation to put me or my family into.

I suppose I should be talking about corn here, like I said I didn't see this coming.  I expected a bailout package to be voted on over the weekend much less today.  I also took the politicians for their word when they said there would be a package passed, oops, I guess I shouldn't have done that.  I really don't have a good answer for what I think will happen because it is all trumped by what happens in Washington and Wall Street as far as I am concerned.  You tell me what happens there and then I will have a better idea.  I wouldn't mind going back to having a market that eventually trades fundamentals and is industry specific when it trades versus the corn market taking its direction from outside influences. If we close the market below $5.04 1/2 we could see a test of $4.84 and then down to $4.37, I don't expect this unless we see no action from the Government and Wall Street continues its decline, it should then drag commodities down with it.

Bottom line - I didn't give much information as to direction above because I honestly don't know.  I still think we are in a great area and have a great opportunity in front of us to cover feed needs for an extended period of time.  I sounds stupid to even say this but tonights open was actually friendly (at least under normal conditions) and would warrent buying at $5.13 1/2 on a stop.  I still think ownership is needed at these levels and there is no better time than now to use options!  Under normal conditions I would say I expect the market to be higher tomorrow with the open we had tonight but we have other forces driving price right now.  We have the USDA out tomorrow morning with the Quarterly Stocks report at 7:30 AM CST.

MEAL
Dec '08 meal closed just above $300.00 today and is currently trading below $300 in the overnight session.  There is good volume in the overnight market thus far and there is a technical buy at $297.50 stop in the Dec '08 meal contract.  This isn't a recommendation because who knows what will happen with the Government as I mentioned above.  I would strongly recommend having coverage in place to the upside via options because early yields continue to come in less than expected which could give the soybean and meal market a spark when the market decides to trade fundamentals again.

Bottom line - like corn the open tonight would be positive under normal circumstances but we are far from that.  I have what would be a couple buy signals in Dec '08 meal for tonight/tomorrow from a technical perspective, one at $297.50 and also at $301.20, both as buy stops.  I would say be cautious in here but still make sure you have protection in place for meal!!!!

HOGS
Dec '08 hogs opened about $1.05 lower today and they also close around that level.  If today would have been a normal day I think hogs could have traded higher on the day but with the House not passing the bailout package everything got nailed.  Hogs were probably the strongest commodity in the Ag sector today.  I haven't changed my opinion of hogs since last Friday, I think the report was what we needed to find a bottom in this market, from a futures perspective.  We need to stay above our most recent low of $64.22 for me to stay with my thoughts of better prices in the near future.  When I talk about better prices I am speaking only for futures at this point, I don't have a firm opinion on cash right now.  I can't seem to get any good direction.

Bottom line - in a normal setting I would expect hogs to trade better tomorrow but as you can probably tell from my comments that I am walking around with my hands up in the air right now wondering what is next?  What can we be surprised with now?  I will go with my technical thoughts of better prices for tomorrow but I am not counting on it.  If you are short the market via hedges I think it is a great time to purchase call options against your short positions to give you upside potential in the market as well as protect any equity that you may have gained on the way down.

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
-----------------------------------------------------------------------
09/29        47.4      74.32   89.57   74.06  54.61  87.34 72.62  83.23
Change :                0.09    0.57   -0.27  -1.62  -0.48  0.63    unc
-----------------------------------------------------------------------

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 :  1.02 lwr   :  1.24 lwr   :  1.02 lwr   :   .31 hgr
Negotiated      :             :             :             :
CARCASS BASIS   : 60.00-73.92 : 63.00-73.20 : 60.00-73.92 : 61.00-72.30
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    69.76    :    70.80    :    70.88    :    68.52
--------------------------------------------------------------------------
Head Count      :   25,229    :    9,870    :   12,959    :   12,032
==========================================================================

Hurley & Associates believes positions are unique to each person’s risk bearing ability; marketing strategy; and crop conditions, therefore we give no blanket recommendations. The risk of loss in trading commodities can be substantial, therefore, carefully consider whether such trading is suitable for you in light of your financial condition. NFA Rules require us to advise you that past performance is not indicative of future results, and there is no guarantee that your trading experience will be similar to the past performance.

 Hog Comments - 09-26-08 Neutral to bearish hog report. Or is it?

CORN
Corn threw me a curve ball today, I expected lower trade but I thought $5.49 or so would stop the market but instead it was $5.39 1/4 instead.  Dec '08 corn settled at $5.43 which is exactly 62% of the way back to our most recent low of $5.24.  The thought on the floor is mostly attributed to the Government bailout program that the lawmakers are having political war with.  It is interesting to watch CNBC and listen to each side bash each other and literally call the other side liars.  I guess my wife's Kindergarten class is nothing compared to Congress.  : )  I am not trying to make light of the gravity of the situation because it is a big deal; it is just comical to see how emotional and childish some can get in times of great pressure and stress.

As usual today was not much different than the last week and a half, I didn't hear much about the fundamentals of the corn market, it was mostly about the outside markets.  It is my understanding that if the "bailout" package isn't passed by Sunday night prior to the Asian markets opening, Wall Street and the commodities sector could be in for a "major sell-off" according to some analysts.  Most analysts, news contributors, Congressmen, Senators and even President Bush seem to think something will be in place prior to the Asian market open on Sunday evening.  I would agree it's too big not to have something done. 

As I said earlier I expected corn to be weaker today but not by $.15 1/4.  We closed at the 62% retracement level today and I would expect the market to respect this level on Sunday evening and Monday.  It is tough to call next weeks action because of the uncertainty with the bailout plan but I think something is coming so I believe the market will be firm.  I said last Friday that I thought this week would provide better trade and it did for most of the week only to close lower today and take back most of the gains.  I can still say I nailed that call by 3/4 of a cent which is how much higher the market closed this week over last weeks close.  Big whoop.

Bottom line - As I said earlier I believe the Government will come through with some type of package which will be supportive the market.  I expect the market to open better on Sunday night and have a better week next week because I didn't get what I was looking for this week.  I expect a test of $5.55 1/2 to $5.59 but it wouldn't surprise me to see the market march right back toward $5.74.  We had an inside week this week and we should trade in the direction of a breakout next week, meaning if we make a new low and close below it a day or two we should continue lower.  The same would go for closing above this weeks high, if we do we would trade higher from there.

MEAL
Dec '08 soybean meal didn't stand a chance today with the soybean and corn markets as weak as they were.  Crude Oil didn't help matters any either.  The Dec '08 contract settled at $320.70 which is just below the 62% retracement level of the most recent low of $311.70.  I would like to see the market trade back above the $321.30 and ultimately $324.20 to consider another shot at $336.20.  I am still hedged on a great deal of soybean meal at $350.00 which is the last entry point for my purchases but with equity that we have kept from other hedge positions, our average is around $300.00 Dec '08 futures.

You must wonder why I always talk like I want the market to move higher.  I usually talk that way because I have a hedge position on.  If you are hedged and you are managing your risk you really shouldn't care which direction the market moves.  I don't care which direction the market moves because I am hedged but I need to talk about the market moving and the direction I am looking for it to move is to the upside which is why I talk like I want the market to move higher.

I have been hearing average to below average soybean yields coming in from various areas throughout the Midwest.  I would say most of them are coming in slightly below expectation.  I will use the disclaimer that these are isolated reports with no scientific formulas to support an overall estimate of U.S. crop size.  Take what I am saying with a grain of salt because we have a lot of harvest to go.

Bottom line - I expect meal to be higher next week just like I do in corn.  I feel like a large move in soybean meal and in soybeans is just around the corner, and from what I am hearing from the countryside the early disappointing yields will support this idea.  I don't see the market getting below $300.00 and if it should I don't think it will be there for very long.  If Dec '08 goes below $311.00 and then trades right back above it next week, it would be a huge buy signal around $312.00 on the weekly charts.  We would NEED to make new lows below $311.00 first for this signal to be good.  We also have the Quarterly Stock report out on Tuesday the 30th at 7:30 AM CST.  MAKE SURE YOU HAVE CALLS IN PLACE ON MEAL!!!!

HOGS
Dec '08 hogs traded steady to better very early in the trade today only to sell off by $.90 or so and then come back to almost unchanged at the end of the session.  The Quarterly Hog & Pig report was out today at 2:00 PM CST which was bearish the front and neutral to friendly to the deferred months.  If you ask me I would say the market already knew this information and has already traded it.  I would expect sell the rumor and buy the fact for this report on Monday.  I think this report could very well be what the market needed to find a bottom in hogs.  Man this is stupid to say on a blog for the entire world to read but it is my honest feeling.  I am not saying lift your hedges by any means; I wouldn't be against buying calls or rolling down put options if you have them.  

I cleaned up my accounts over the last couple of days.  I basically turned my hedges into a synthetic put (a synthetic put = short futures + call option) options yesterday and today because of the big move lower we've had in the hog market over recent weeks and the futures price risk (as I see it) is to the upside right now.  I don't want to give back all the equity we made in our short hedges on the way down from the mid-70's levels in Dec '08 which is where I have all of my hedges right now.

The report today is being viewed by many as neutral to bearish, I agree, that is what the report says if taken at face value BUT I don't know as though the market will treat it that way.  Dec '08 futures have traded below $66.05 eleven of the last fourteen sessions and have only managed to close below this level two times.  This is a very good support level and I think we may trade the negative side of the report for the first hour or two on Monday and then work higher the rest of the week.

Again, please don't make marketing decisions based on the opinion I have just given because it is just that, my opinion.  Like I said in my meal comments, if you are hedged and you are managing your risk you shouldn't care which direction the market moves.  I don't at this point because I am positioned to gain either way.  My feeling is also based on my experience; I don't have any major technical indicator telling me to go long the hog market.  Actually the Dec '08 contract is in a sideways range between $64.22 and $67.67.  When we break out of this sideways range either to the upside or downside, we should have a big move.

Bottom line - I like the fact that we have traded 11 of the last 14 days below $66.05 and have only managed to close below this level 2 times.  That is pretty good support.  I expect the early part of the week to be slightly lower and then firm as the week progresses.

HOG & PIG REPORT HIGHLIGHTS

U.S. Hog Inventory up 2 Percent

U.S. inventory of all hogs and pigs on September 1, 2008 was 68.7 million

head.  This was up 2 percent from September 1, 2007 and up 1 percent from

June 1, 2008. 

Breeding inventory, at 6.05 million head, was down 3 percent from last year

and down 1 percent from the previous quarter.  Market hog inventory, at

62.6 million head, was up 3 percent from last year and up 2 percent from last

quarter.

The June-August 2008 pig crop, at 29.3 million head, was up 1 percent from

2007 and up 10 percent from 2006.  Sows farrowing during this period totaled

3.08 million head, down 2 percent from 2007 but up 6 percent from 2006.  The

sows farrowed during this quarter represented 51 percent of the breeding

herd.  The average pigs saved per litter was 9.51 for the June-August 2008

period, compared to 9.29 last year.  Pigs saved per litter by size of

operation ranged from 7.80 for operations with 1-99 hogs and pigs to 9.60 for

operations with more than 5,000 hogs and pigs. 

U.S. hog producers intend to have 3.01 million sows farrow during the

September-November 2008 quarter, down 5 percent from the actual farrowings

during the same period in 2007, but up 2 percent from 2006.  Intended

farrowings for December 2008-February 2009, at 2.98 million sows, are down

3 percent from 2008 but up 3 percent from 2007.

The total number of hogs under contract owned by operations with over 5,000

head, but raised by contractees, accounted for 43 percent of the total U.S.

hog inventory, up from 40 percent last year.

           Farrowings:  Number of Sows, Pig Crop, and Pigs per Litter,         

                           United States, 2006-2009 1/                         

--------------------------------------------------------------------------------

                :         :         :         :         : 2008 as % of  : 2009 

      Item      :  2006   :  2007   :  2008   :  2009   :---------------:as % of

                :         :         :         :         : 2006  : 2007  : 2008 

--------------------------------------------------------------------------------

                : ------------ 1,000 Head ------------     ----- Percent ----  

                :                                                               

Sows Farrowing  :                                                              

  Dec-Feb 2/ 3/ :  2,841     2,905     3,071     2,983     108     106     97  

  Mar-May       :  2,927     3,033     3,092               106     102         

  Dec-May 2/    :  5,768     5,938     6,163               107     104         

                :                                                              

  Jun-Aug       :  2,912     3,132     3,076               106      98         

  Sep-Nov 4/    :  2,949     3,180     3,006               102      95         

  Jun-Nov 5/    :  5,862     6,312     6,082               104      96         

                :                                                               

Pig Crop        :                                                              

  Dec-Feb 2/    : 25,662    26,396    28,388               111     108         

  Mar-May       : 26,580    27,896    29,000               109     104         

  Dec-May 2/    : 52,242    54,293    57,388               110     106         

                :                                                              

  Jun-Aug       : 26,519    29,094    29,251               110     101         

  Sep-Nov       : 26,857    29,511                                             

  Jun-Nov       : 53,376    58,606                                             

                :                                                               

                :   ------------- Number -------------     ----- Percent ----  

Pigs per Litter :                                                              

  Dec-Feb 2/    :   9.03      9.09      9.24               102     102          

  Mar-May       :   9.08      9.20      9.38               103     102         

  Dec-May 2/    :   9.06      9.14      9.31               103     102         

                :                                                              

  Jun-Aug       :   9.11      9.29      9.51               104     102         

  Sep-Nov       :   9.11      9.28                                             

  Jun-Nov       :   9.11      9.28                                             

--------------------------------------------------------------------------------

1/  May not add due to rounding.                                               

2/  December preceding year.                                                   

3/  Intentions for 2009.                                                       

4/  Intentions for 2008.                                                       

5/  Actual farrowings for June-August plus intentions for                      

    September-November.                                                        

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
-----------------------------------------------------------------------
09/26        43.5      74.23   89.00   74.33  56.23  87.82 71.99  83.23
Change :               -0.52   -1.34    1.29  -0.99   0.64 -1.35   0.88
-----------------------------------------------------------------------

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 :   .24 lwr   :   .61 hgr   :   .31 hgr   :   .16 hgr
Negotiated      :             :             :             :
CARCASS BASIS   : 61.00-74.00 : 62.00-74.00 : 62.00-74.00 : 61.00-71.62
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    70.45    :    72.07    :    71.85    :    68.08
--------------------------------------------------------------------------
Head Count      :   26,284    :   13,142    :   16,545    :    9,739
==========================================================================

Hurley & Associates believes positions are unique to each person’s risk bearing ability; marketing strategy; and crop conditions, therefore we give no blanket recommendations. The risk of loss in trading commodities can be substantial, therefore, carefully consider whether such trading is suitable for you in light of your financial condition. NFA Rules require us to advise you that past performance is not indicative of future results, and there is no guarantee that your trading experience will be similar to the past performance.

Hog Comments - 09-24-08 - Grains slightly higher but hogs close mixed.

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
-----------------------------------------------------------------------
09/24        88.5      75.22   91.39   74.05  56.60  85.31 74.15  82.43
Change :                0.22    0.83   -1.66  -0.04  -2.29  0.97  -0.06
-----------------------------------------------------------------------

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 :  1.08 lwr   :  1.50 lwr   :  1.36 lwr   :   .48 lwr
Negotiated      :             :             :             :
CARCASS BASIS   : 59.00-73.75 : 59.00-73.75 : 59.00-73.75 : 61.25-72.30
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    69.80    :    70.90    :    70.88    :    67.62
--------------------------------------------------------------------------
Head Count      :   21,814    :   10,505    :   14,125    :    7,340
==========================================================================

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
-----------------------------------------------------------------------
09/22        64.5      75.86   91.92   74.88  57.34  87.36 74.78  83.38
Change :               -0.80   -1.17   -3.76  -1.95  -0.48 -0.11   0.97
-----------------------------------------------------------------------

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 :  1.16 hgr   :  1.02 hgr   :  1.16 hgr   :   .57 lwr
Negotiated      :             :             :             :
CARCASS BASIS   : 59.00-73.00 : 59.00-73.00 : 59.00-73.00 : 60.00-71.00
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    68.87    :    69.83    :    69.94    :    65.38
--------------------------------------------------------------------------
Head Count      :   27,612    :   16,098    :   20,848    :    6,464
==========================================================================

I exited my long futures positions today around $5.42/.44. I had an order in at $5.52 but after the 3rd hour of trade and we didn't make new highs above $5.48 I went to the market to get it done. I expected the market to sell off going into the close because of the low volume we had today. I was right but I was wrong too, it did sell off but right at the end of trade the market rallied $.10! I didn't want to hold a position over the weekend because of all the uncertainty in the financial markets. I think the Gov has fixed the problem for now but I want to see something more from the market before I hang on to a position over the weekend. I am still long calls for feed so I am not completely out of the market by any stretch.

I still want to be long feed for a long period of time because I think fundamentals warrant the ownership at these levels. I would expect the corn market to open better on Sunday night in conjunction with the close we had today. I do not think we will scream higher unless the trade feels there is some type of crop concern. Crude Oil is up $6.34 today and it was up around $2.50-$3.00 when the corn market closed. The Crude Oil chart looks poised to follow through next week if we get above this weeks high of $105.25. From a weekly chart perspective I would venture to guess Crude Oil is just beginning its move higher. Stops should be triggered above $105.25 next week.

Bottom line - This is the second week in a row we failed to close below the previous week's low. I feel corn can be stronger next week and get stronger as we go when the "funds" are through playing games. I expect Dec '08 corn to be better next week and but we still need to have a daily close above a prior day close, the last time we did that was last Friday.

 

MEAL
Dec '08 meal didn't do much today, I said yesterday that $320-$322 would probably hold as resistance for Dec Meal. The high in Dec '08 meal today was $320.20 so the lower end of the resistance range held. $327-$330 is an area of resistance that I expect to touch next week. I said last Friday I thought was could test $347.40 and that turned out to be wrong by $7.50 because our high was only $339.90.

We didn't have a stellar week in meal or soybeans for that matter so the weekly chart isn't anything to write home about. A higher steady opening on Sunday evening would allow for good follow through to the downside if this weeks low is violated. The low for this week was $311.70 which is $.30 away from the low we had in August. I would not take the chance of selling new lows based on how close we came to the August low and didn't take it out and make new lows.

I am NOT a bear at these levels in soybean meal. I want to and do have extended coverage in place for feed needs. I am long around $350 on my last purchase but we have equity built up from other positions that puts our average around $300/ton futures price.

Bottom line - I expect meal to open mixed on Sunday night, no strong conviction one way or the other but I do expect to have a better week next week and test the $327-$330.00 level in the Dec '08 contract.


HOGS
Dec '08 hogs closed $1.00 CWT higher today which was in line with what I expected based on yesterdays comments. I didn't expect a $1.00 higher close, I just expected better trade today. The market opened strong with good fund buying but when the noon cash report came out we seem to have had our last pop in the market. From a weekly perspective the market seems like it respects the $66.00 level as support. We have traded below it every week for the last six weeks and only close below $66.00 (on a Friday) once.

The weekly action is supportive of a possible bounce in Dec '08 hogs. I have been saying for the last day or two the daily chart seems to be forming a broadening triangle which signals a potential price reversal. NOTHING has formed just yet nor has there been confirmation, it is just something I am watching.

I would like to talk about projection points, support and resistance for Monday but my charts are not giving me todays trade action for some reason. It feels like we should have a better week of trade next week especially if we can make new highs above this weeks high of $67.50 and close there for a day or two. Cash and cutout values were mixed tonight as cash was around a $1.00 higher and cutout was down $.29.

Bottom line - I expect to see buy stops above $67.50 in the Dec '08 contract but only if the market manages to get there. If we can get above this level and close there then I would expect the market to close above this level next week. Today's close would suggest at least a challenge of $67.50 next week.

USDA ESTIMATED PORK CARCASS CUTOUT
Based on FOB Omaha carlot pork prices and industry yields.

       Calculations for a 200 lb Pork Carcass
    53-54% lean, 0.65"-0.80" backfat at last rib
-----------------------------------------------------------------------
     Total                   Today's Primal Cutout Values
Date     Loads      Carcass    Loin    Butt   Pic     Rib   Ham  Belly
-----------------------------------------------------------------------
09/19        18.3      76.66   93.09   78.63  59.29  87.85 74.88  82.40
Change :               -0.29    0.14    0.56   0.05   0.02 -2.48   1.46
-----------------------------------------------------------------------

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 :  1.08 hgr   :  1.15 hgr   :  1.27 hgr   :  1.04 hgr
Negotiated      :             :             :             :
CARCASS BASIS   : 58.00-72.00 : 58.00-72.00 : 58.00-72.00 : 60.25-71.00
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    67.73    :    68.83    :    68.79    :    65.99
--------------------------------------------------------------------------
Head Count      :   32,720    :   16,349    :   20,534    :   12,006
==========================================================================

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.

Dec '08 Corn

Corn started the day off at $5.37 3/4 which was up .05 cents from yesterday's close only to back off and and 10:30 AM timeframe at $5.31 1/2. This would suggested the corn market would close below $5.37 1/4 because we were trading lower than the open at 10:30 AM. The Dow Jones had trouble this morning as it made new lows once again. it seems as if investors were fleeing from the stock market and purchasing gold which was up over $82 at one point today. The corn market has an interesting set up as it made new lows this morning once the market found out it couldn't push much lower than $5.26 it reversed itself and took the path of least resistance which was higher. Because we made lows of $5.31 twice in recent days, the move below $5.31 today and immediately turn around and coming back up through those levels triggered a buy signal at $5.31 1/2 today which we closed well above. December 2008 corn to close above this level tomorrow as well.

Now that we have the close above $5.31, we should see a kick in volatility and continue with our move higer. The next target I have is $5.80 or Monday's high price. We closed the day above the levels I talked about yesterday, $5.48-$5.52. If we can hold this support tomorrow I would expect a trip toward the $5.80 number in the near future.

Bottom line - I expect corn to open slightly lower tonight only to find support. Unless Crude Oil (up $5.00 by the way) tanks before corn opens tonight I think we should expect steady to lower opening and then move higher to challenge todays high of $5.60. I bought the other 1/2 of my corn position today at $5.45 on a stop.


Dec '08 Meal

Dec '08 meal is lagging something fierce. I am still not a bear at these levels for meal but it sure doesn't want to catch the fire here either. I would like to see us get above $329.30 tomorrow which is the 50% retracement back to the recent high of $342.20. It feels as if we could open mixed to lower tonight then find support around $320-321.00 before making a move higher. We should have some stop order buying above todays high of $326.20 which could give us some strength to start moving toward the $342.20 area.

Meal and soybeans both were weak on the floor, corn rallying as much as $.27 higher and meal only getting $7.00 higher and sobyeans around $.20 higher on the day. Hmmm, what's the scoop? I said yesterday there was a potential buy signal at $324.50 on a stop if we got there today, well we did so theoretically the charts are long at $324.20 with a sell stop below $316.10. I didn't take this trade because I am already long Dec '08 meal at $350.00 and will continue to hold this position for now.

Bottom line - Like I said before, I expect steady to lower opening tonight. We should find support around $320-321.00 and then make a move toward todays high of $326.20 sometime tonight or tomorrow, probably tomorrow.


Dec '08 Hog

Dec '08 hogs rallied sharply just after the open putting in a high of $67.50 which had Dec '08 up $1.40 for the high of the day. It didn't stay up there long though as it was trading around $66.02 or down $.07 at 10:00 AM this morning. The trade was fairly quiet after that but we managed to put a low in at $65.50 which was down $.60 only to settle the day out at up $.35 on the day. Todays trade action left the charts looking like we could see sideways trade between $64.30 and $67.50. I will say there is an interesting pattern that COULD be forming in the Dec '08 hog chart (Globex chart); it looks like we could be forming a broadening triangle which is usually a sign of a potential reversal. Nothing has formed yet but I will continue to monitor it and watch its developments if any.

The US Dollar Index took a tumble today and is trading .995 lower today and is below the 78.22 number I wrote about last Friday. If the Index closes below this number on Friday it would be a fair assumption that we could see more selling next week and the Dollar could begin to soften further. Cash hogs were lower in the East and nationally this morning but the IA/MN and Western corn belt were higher. The afternoon cash report was slightly mixed but mostly higher as you will notice below.

Bottom line - I expect hogs to open better this evening (5:00 PM CST) and hold higher prices until morning, mostly because there is very little volume in the overnight trade and then retrace some tomorrow. I would expect a test of the $65.90-$66.25 area before we find good support. I am still waiting for a close above a prior day high before I get excited about the thought of a good rally. 

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
-----------------------------------------------------------------------
09/17       101.1      76.86   93.06   76.81  59.42  87.65 78.34  79.48
Change :                0.90    1.21   -0.43   0.12   1.38  2.26    unc
-----------------------------------------------------------------------

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 :   .09 lwr   :   .62 hgr   :   .60 hgr   :   .55 lwr
Negotiated      :             :             :             :
CARCASS BASIS   : 59.00-72.00 : 59.00-72.00 : 59.00-72.00 : 60.50-67.57
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    65.52    :    66.73    :    66.90    :    63.41
--------------------------------------------------------------------------
Head Count      :   22,726    :    9,332    :   13,756    :    8,735
==========================================================================

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

Corn fell apart faster than a $2.00 suitcase today as it opened around $.03 higher and then just tanked. We touched limit lower for a minute or two before bouncing $.11 off the low. Some of the volatility came from Crude Oil trading up to $102.24 only to sell off and trade lower for a fair amount of the corn trade session.  It is now trading $1.66 higher as I write this.  Gold continued to climb, it was as much as $75 higher at one point today only to retrace most of todays early gains when the Dow Jones began its afternoon rally.

Back to corn, I like it when we make big moves early in the day because they usually don't stick unless there is a very solid fundamental reason.  Today seemed to be more fund liquidation as I understand it, commodity funds liquidated around 13,000 contracts.   I have to say I didn't expect the market to do what it did today and I don't think I was alone.  We made lows below yesterdays low of $5.26 but closed above that level today settling at $5.27 1/4.

I expect corn to open lower tonight, find some support and try to make a rally toward the $5.41-$5.45 area of resistance which is 50% and 62% retracement back to the $5.58 high in today's session. The market seemed pretty weak going into the close today with what is rumored to be the effects of the trouble AIG is having on Wall Street.  The Dow Jones made a huge rally toward the end of the session closing around 400 points higher on the day, around 550 points off of its low of the day.

Bottom line - I expect a lower opening tonight and look for support to show up at lower levels. It might be a stretch expecting better trade tomorrow but it is Friday and funny things happen on Fridays!  I believe we will have mixed to higher trade tomorrow going into the weekend.

MEAL

Dec '08 meal didn't do well today but it wasn't a complete mess either.  We blew through the support points I talked about yesterday at $320-$321.  I have to say, this bean complex is really throwing me for a loop.  I am and have been looking for soybeans and soybean meal to bounce but the market isn't having it.  I am maintaining my stance to be hedged on meal, preferably with options.  I have a buy signal setup for tomorrow which would be buying  $316.50 on a buy stop order with an exit sell stop below the current low at the time of the fill of the buy order.  This is not a recommendation but more of an observation.

The meal market is so close to the August low of $311.20 that I find it hard to believe we will not go down and test it. I would expect another test of $311.20 and if we can't break through those lows then we should rebound.  Resistance for tomorrow is $320-$322 in the Dec '08 contract.

Bottom line - I expect meal to open lower tonight and find support.  Once support is established I think we can bounce some but I am not sure how high we can get.   I think $320-$322 tomorrow would stop the market for now.  The sell off today has been rumored to be leftovers from the AIG mess.

HOGS

Dec '08 hogs started the morning strong and then fell apart. Depending on the weekly close tomorrow, the weekly chart is showing signs of warning if one is short. This is not a recommendation to exit any hedges, it is just an observation, I still need to see the close tomorrow. Well, the range I talked about sideways range I talked about yesterday, $64.30 - $67.50 was actually proven today. I didn't expect to meet both objectives in one day but the thought was accurate. The high in Dec '08 hogs (Globex hogs) today was $67.30 and the low was $64.22, very close to the numbers I spoke of yesterday.

I am still of the opinion we could be forming a broadening triangle which is a reversal formation. Nothing has been formed or completed, I am just watching it to see how it unfolds. I am still hedged from the mid-$70's and will stay this way until I see fit to adjust my positions to protect equity. I currently have options in place to protect some equity but not all of it. I will wait for a day that we close above a prior day high before I get excited about a rally.

Bottom line - I expect hogs to open better tonight (5:00 PM CST) and possibly test $65.75 in the Dec '08 contract. I don't believe tomorrow is going to be fun a of trade.  I am unsure of which direction I feel the market is going to go. My gut says better because we had a negative day today and it is Friday so there should be position squaring going into the weekend. I will go with a better trade for tomorrow in Dec '08 hogs.

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

-----------------------------------------------------------------------

09/18        39.0      76.94   92.94   78.08  59.24  87.63 77.36  80.94

Change :                0.08   -0.12    1.27  -0.18  -0.02 -0.98   1.46

-----------------------------------------------------------------------

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 :   .16 hgr   :   .07 hgr   :   .07 lwr   :  1.35 hgr

Negotiated      :             :             :             :

CARCASS BASIS   : 59.00-70.75 : 59.00-70.75 : 59.00-70.75 : 60.00-69.00

185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg

Plant Delivered :    66.46    :    67.55    :    67.40    :    64.83

--------------------------------------------------------------------------

Head Count      :   28,324    :   13,237    :   17,882    :   10,380

==========================================================================

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.