Hog & Corn Comments – 11/10/09 Corn stands firm on its own today, hogs lower.
Nov 10, 2009
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CORN – Dec ‘09 Electronic
Open – $3.84, High – $3.97, Low – $3.79 1/4, Close – $3.94 1/2 Up $.08 1/2
Thoughts – Long Term (into December ‘09) – Sideways/Lower
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Dec ‘09: The market traded both sides of unchanged today with a slightly friendly report from the USDA this morning. The report was somewhat offset because the soybean portion of the report was negative and hindered a higher opening for corn. The market opened lower then traded higher before backing off again until noon when it managed to find new life to the upside again. It is interesting when you look for correlations between corn and the dollar or crude. Sometimes it is there and sometimes it isn't, like today for example crude was lower and the dollar was higher as corn rallied at noon to turn the market positive again.
We are on the sidelines in corn right now as the weather forecast is now drier again for the weekend, the forecast has flip flopped so many times in the past month it is hard to keep track! Logic would say we should experience good harvest progress for the next week or so and logic would suggest pressure on the market but as I've said before sometimes logic is an irrational word. We are going to remain on the sidelines for now until this market settles down. There seems to be buying coming at times that don't make sense and I feel there will be opportunities to own corn at a lower price that we have today however I could change my mind tomorrow so as always do what is right for you and your operation!
Bottom line: I am looking for the market to experience an early high tomorrow.
Dec ‘09 Corn – Support/Resistance for 11-11-09
(R3) Resistance 3: $4.13 1/2
(R2) Resistance 2: $4.08
(R1) Resistance 1: $4.01 1/4
Today’s close: $3.94 1/2
(S1) Support 1: $3.901/4
(S2) Support 2: $3.83 1/2
(S3) Support 3: $3.72 1/2
MEAL – Dec ‘09 Electronic
Open – $293.40, High – $294.20, Low – $284.00, Close – $288.20 Down $6.10
Thoughts – Long Term (into November ‘09) – Sideways/Lower
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Dec ‘09 meal: Meal took it on the chin today as it tested the support area of $283.40 I spoke of in my last my last post. It feels like the $283.40 area wants to hold as our low for now but I need more confirmation to be comfortable with it. If $283.40 doesn't hold then we could see a test of $266.10 but I'm not confidant we are going to reach that level but we have also gotten a bearish soybean report since I made this comment last week.
For now I'm sticking with my thought of the $283.40 area holding support but if we closed two consecutive day's below $283.40 then we could certainly test $266.10. We will look for an opportunity to establish our long meal positions when the market dictates this type of move and it could come sooner rather than later judging by the way the charts are setting up.
Bottom line: I’m looking for the market to experience an early low tomorrow.
Dec ‘09 Meal – Support/Resistance for 11-11-09
(R3) Resistance 3: $309.20
(R2) Resistance 2: $299.00
(R1) Resistance 1: $293.60
Today’s close: $288.20
(S1) Support 1: $283.40
(S2) Support 2: $278.60
(S3) Support 3: $268.40
HOGS – Dec ‘09 GLOBEX
Open – $55.65, High – $56.075, Low – $55.225, Close – $55.625 Down $.175
Thoughts – Long Term (into December) – Neutral
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Dec ‘09 hogs: The Dec '09 hogs were very quiet today as today marks day three of the Goldman roll which typically makes a mess of the market as they try to execute their business. The last day of the roll should conclude on Thursday of this week. The market looks like it could be slowing down and looking for a small pop higher as we move forward over the coming day or two. The intra-day charts suggest higher prices for tomorrow which I would agree with.
I still have the market moving lower over time into the beginning of next week but that isn't to say we will not have fluctuation between now and then. Today's low was exactly 50% of the way back to the $52.10 low we had on Oct 20th. Typically the markets will retrace to 50% of a move to see if it can find more buyers if the market is trending higher or more sellers if the market is trending lower. Thus far the market has found support at the $55.25 area although I think we could have one more test of this level to make sure the market wants to make another move higher.
This Friday's close will give us more indication of market direction. If the market closes below last week's low of $55.625 it will be the first time since the week of Aug 3rd that we have done so in the Dec '09 contract. If we close below $55.625 on Friday I will be looking for more downside next week but if we don't then this setback that we've had for the last few trading sessions could just be profit taking action.
We remain in our synthetic put positions for now so we have downside risk protected in the market and the upside opportunity is completely open.
Bottom line: I’m looking for an early low tomorrow.
Dec ‘09 Hogs – Support/Resistance for 11-11-09
(R3) Resistance 3: $57.40
(R2) Resistance 2: $56.55
(R1) Resistance 1: $56.175
Today’s close: $55.625
(S1) Support 1: $55.325
(S2) Support 2: $54.85
(S3) Support 3: $54.00
(S4) Support 4: N/A
(S5) Support 5: N/A
(S6) Support 5: N/A
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