Hog & Corn Comments - 11/16/09 More buying in corn
Nov 16, 2009
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CORN – Dec ‘09 Electronic
Open – $3.93, High – $4.02 1/2, Low – $3.90 3/4, Close – $4.02 1/4 Up $.11 3/4
Thoughts – Long Term (into December ‘09) – Sideways/Lower
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Dec ‘09: The corn market wanted to be firm today and got off to an excellent start but then failed to hold its gains early. Corn harvest has made good strides in the days that have been allowed for harvest activity. If there is one thing certain about the American farmer, it's their work ethic. If they are given a window of opportunity you can be assured they will rise up and work as long and hard as they need to accomplish the task at hand and this year's harvest is no exception.
$4.13 1/2 remains a key number in the Dec '09 corn, if the market can close above this level for two consecutive days then we open the hatch for more upside but until then we are sitting on the sidelines. The buying that is happening is due to U.S. Dollar Index related inflationary hedging. The money moving into the market has no bias based on the crop in the field it is all based on one simple rule, dollar weak, commodities strong. The tough part about trying to read a market in this environment is you need to through logic out the window. The reasons for buying are that of issues that don't necessarily have anything to do with the industry.
Fed. Chairman Ben Bernanke spoke today and said interest rates will stay low for an extended period of time but also the Gov will be monitoring the weak dollar very closely as well. Here is a link to an article from CNBC that will give more details; click here for story. When Mr. Bernanke was speaking is when the corn market declined to its lowest level of the day session but after the speech was finished the market rebounded back toward its previous levels.
Bottom line: I am looking for the market to experience an early high tomorrow.
Dec ‘09 Corn – Support/Resistance for 11-17-09
(R3) Resistance 3: $4.22
(R2) Resistance 2: $4.10 1/4
(R1) Resistance 1: $4.06 1/4
Today’s close: $4.02 1/4
(S1) Support 1: $3.981/2
(S2) Support 2: $3.94 1/2
(S3) Support 3: $3.86 3/4
MEAL – Dec ‘09 Electronic
Open – $305.70, High – $308.70, Low – $301.90, Close – $304.40 Up $3.30
Thoughts – Long Term (into November ‘09) – Sideways/Lower
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Dec ‘09 meal: Meal struggled the most out of the feed grains today. Meal was also the one that rallied the most last week when there were concerns over mold in corn and the thought was livestock producers would have to feed more meal to replace the reduction in DDG's (Dried Distillers Grain). Like corn we are on the sideline for now in soybean meal as we have stepped aside to allow the influx of funds come into the market. $312.50 is a key number for me and if we close above this level for two consecutive days then it will get my attention but for now we wait.
Dec '09 meal has traded above $307.30 eight times since the beginning of October 2009 but has failed to get a daily close above this price. $307.30 has been good resistance so we will continue to monitor the meal as it continually fails against $307.30.
Bottom line: I’m looking for the market to experience an early high tomorrow.
Dec ‘09 Meal – Support/Resistance for 11-17-09
(R3) Resistance 3: $318.60
(R2) Resistance 2: $311.80
(R1) Resistance 1: $308.10
Today’s close: $304.40
(S1) Support 1: $301.30
(S2) Support 2: $298.20
(S3) Support 3: $292.40
HOGS – Dec ‘09 GLOBEX
Open – $54.90, High – $55.50, Low – $54.80, Close – $54.95 Down $.05
Thoughts – Long Term (into December) – Neutral
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Dec ‘09 hogs: The Dec '09 had an up and down kind of day as we were up early until the noon cash report came out with weaker cash quotes. The problem with the noon report is you really can't believe much that is on it because it changes so much by the end of the day especially if the noon report is at an extreme either up or down. Today the quotes came in a couple dollars lower in the Midwest and I wouldn't be surprised to see the afternoon report come in down less than a dollar. It is purely a guess on my part but that's the way the reporting seems to work.
As of right now the Dec '09 contract is still trending lower off of our last swing high of $58.40 and we have yet to take out the high from last Thursday of $55.60 which tells me the market remains in retreat mode for now. The market has tested the $55.25 area of resistance the last two day's but has failed to close above it, this tells me we should test $54.30 and if we close below that we could see $52.10 again in the near future.
There was another animal cruelty video that surfaced today as a worker used a hidden video camera to document some of the activities that went on in a hog farm in Central Pennsylvania. The video was posted on Foxnews.com as the main headline for at least a half an hour or more before it was moved to a secondary headline that was still at the top of the web page. I don't think this video will have any effect of the market but the hog industry sure doesn't need any more negativity!
We continue to hold our short futures long call option position in the Dec '09 contract for now and will do so for the time being.
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 11-17-09
(R3) Resistance 3: $56.475
(R2) Resistance 2: $55.75
(R1) Resistance 1: $55.35
Today’s close: $54.95
(S1) Support 1: $54.65
(S2) Support 2: $54.375
(S3) Support 3: $53.675
(S4) Support 4: N/A
(S5) Support 5: N/A
(S6) Support 5: N/A
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