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The Lean Hog Perspective

RSS By: Jeremy Knutson

This lean hog and feed commentary contains thoughts from Jeremy Knutson, a commodity broker with Hurley & Associates.

Hog & Corn Comments 04/16/09 - Meal takes center stage today.

Apr 16, 2009

Hog Comments - 04/16/09 - Meal takes center stage today.

If you have questions, comments or suggestions, contact me at 1-877-212-2564 or email me at jknutson@hurleyandassociates.comTo read what I was thinking at the highs and lows of the market go to  www.leanhog.net to view my archived posts.

CORN - May ‘09 Electronic
Open - $3.85 1/4, High - $3.89 1/2, Low - $3.80 3/4, Close - $3.85 3/4 Up $.01 1/4.

Thoughts - Long Term (6 months) - Bullish/Higher
Yesterday I said: Early resistance was a common theme in corn today the session high was indeed made early in the day.  Today's trade in the May '09 contract was ugly to put it lightly and we closed below yesterday's low which isn't encouraging.  As I've said recently I am looking for an opportunity to purchase May '09 corn around $3.76 1/2 if I can.  $3.76 3/4 is our next downside target assuming we can break Monday's low of $3.83.  I will gain ownership at $3.76 1/2 if possible against the $2.80 put options we own.  I think this down turn in the market is a correction of what will be a longer-term higher move in the market based off of inflation fears.  I am looking for the market to have follow through to the downside tomorrow and experience an early low and a late high

May ‘09 corn:  The May '09 corn contract is indeed looking for a bottom for the week but it doesn't seem to want to stop moving lower.  I had an order in to buy May '09 corn at $3.76 3/4 to re-own what I exited at $4.03 but I didn't get my fill.  I still have a bull call spread in place in case I am wrong.  I think we will have an early low tomorrow and a late high because of the downward movement we've had this week and Friday profit taking and position squaring going into the weekend.  I still have a cycle projection for corn to be soft (lower) into the week of next week.

Bottom line: I am looking for the market to experience an early low and a late high because of the aforementioned profit-taking going into the weekend.  I will continue to try and buy around $3.76 3/4.  

May '09 Corn - Support/Resistance for 04-17-09
(R3) Resistance 3: $3.94 3/4
(R2) Resistance 2: $3.89 3/4
(R1) Resistance 1: $3.87 3/4
Today's close: $3.85 3/4
(S1) Support 1: $3.85
(S2) Support 2: $3.80 3/4
(S3) Support 3: $3.76 3/4

_________________________________________________________________________

MEAL - May ‘09 Electronic
Open - $317.10, High - $329.40, Low - $316.80, Close - $329.40 Up $12.10
Thoughts - Long Term (6 months) - Bullish/Higher
Yesterday I said: "I’m looking for the market to have follow through to the downside tonight/tomorrow and experience an early low and a late high.  I still feel the market is near a top and today could very well be this week's high.  I will wait to re-enter an aggressive position in the market until we get back near $300.00 if we get there.  Technically speaking there could be more sell stops below $314.50 tomorrow.

May ‘09 meal: Reading my thoughts from yesterday proves the market has a mind of its own and will do what it pleases as it screamed through my resistance levels.  The sell stops below $314.50 were never tripped today because the market never got that low.  There is another potential sell signal setup tonight if the market opens above $329.40 and trades below this level it will trigger a sell on the candle stick charts.  I am keeping my call spreads in place for now to maintain ownership if the market continues to move higher and will look to get more aggressive positions in place on a price decline.

Bottom line: I’m looking for the market to have follow through to the upside early tonight/tomorrow and experience an early high and a late low.  I see a potential sell signal ONLY if we open at $329.50 or higher in tonight's trade.  If the market opens slightly lower, then it is primed for a follow through move higher tomorrow.  Stay objective in this market and don't chase it if you don't have coverage in place; if you need to protect meal use a call option for now and buy on a dip.

 May '09 Meal - Support/Resistance for 04-17-09
(R3) Resistance 3: $348.70

(R2) Resistance 2: $340.10

(R1) Resistance 1: $332.80

Today's close: $329.40
(S1) Support 1: $324.00

(S2) Support 2: $321.10

(S3) Support 3: $318.60

_________________________________________________________________________

HOGS - June ‘09 GLOBEX
Open - $73.40, High - $74.10, Low - $73.175, Close - $73.275 Up $.225
Thoughts - Long Term
(6 months) - Friendly
Yesterday I said: I’m looking for the market to be higher tonight/tomorrow and experience an early high and a late low.  I expect the June ‘09 hog contract to open higher tonight and follow through with early strength because of higher cash and cutout but falter as the day progresses. Seasonally we tend to move lower from today's close until the April 30th close and I will stick with the 80% odds of that seasonality along with the other signals that show up to support that type of move."

 June ‘09 hogs:  The early high and late low happened again today and tomorrow is showing signs of similar activity.  Today's trade action on the daily chart was nothing to brag about as we closed near where we opened.  The cash market was lower at noon which gave an excuse for the futures to move lower the balance of the day.  As stated in the above paragraph I am sticking to a cautious short-term outlook in the hogs as we move into the last half of April with the seasonal tendency to move lower in years where we closed above $70.00 on April 15th in the June contract.  

Bottom line: I’m looking for the market to be higher tonight/tomorrow and experience an early high and a late low.  Once again the cutout was up by $.65 today and should provide some support for tomorrow's market; however, nothing is a "secret" anymore so I expect that some of today's positive cutout news has already been traded.  I am sticking to my thoughts of early high and late low for tomorrows June '09 hog trade.

June '09 Hogs - Support/Resistance for 04-17-09
(R3) Resistance 3: $74.85
(R2) Resistance 2: $74.10
(R1) Resistance 1: $73.75
Today's close: $73.275
(S1) Support 1: $73.05
(S2) Support 2: $72.80
(S3) Support 3: $72.00

 

NW_LS500
Des Moines, IA     Thu, Apr 16, 2009     USDA Market News

USDA NATIONAL CARLOT PORK REPORT as of:  3:00 P.M.
Purchases equated to FOB Omaha Basis.

Compared to Wednesday's Close:      Fresh loins generally steady
to firm; butts mostly steady; sknd hams 23-27 lbs 3.00 lower, other weights not
tested; sdls bellies not tested; lean trimmings steady. Trading slow, with light
to moderate demand and mostly light offerings.



-----------------------------------------------------------------
Loads PORK CUTS          :             72.75
Loads TRIM/PROCESS PORK  :               6.0
-----------------------------------------------------------------

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

           Calculations for a 200 lb Pork Carcass
        53-54% lean, 0.65"-0.80" backfat at last rib
-----------------------------------------------------------------------
         Total                   Today's Primal Cutout Values
Date     Loads      Carcass    Loin    Butt   Pic     Rib   Ham  Belly
-----------------------------------------------------------------------
04/16        78.8      61.91   77.65   69.43  35.79 107.54 48.73  76.71
Change :                0.65    2.02   -0.10   1.42   4.35 -0.80    unc
-----------------------------------------------------------------------

The Afternoon Price report was available at the time of this release so click here
for the report.

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.


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