July 2010 Archive for The Lean Hog Perspective

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

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Corn – The $3.91 area that I spoke of last week was tested but the market failed to stay above this level of resistance for more than two days.  We have probably begun a small correction here in an effort for the market to catch its breath after the wild ride we’ve have over the past couple of weeks.  The Sept ‘10 corn market has the ability to test the 50% retracement level of $3.65 1/4 over the coming couple of weeks.  I see a small relaxation in price prior to the beginning of August and then we could make another trek higher.

I said last week that we could look for another possible $.50 rally in the Sept ‘10 contract if we got two consecutive closes above $3.93.  We only got one close above $3.93 last week and failed to hold.  This isn’t surprising as most of the time the market will fade the first attempt at resistance, scare people into shorting the market and then BAM, ram it down your throat!  The market will use the people who got short as fuel to propel the market through the resistance area via the triggering of buy stops from those that got scared and took a short position in the market.

I would visit with a risk manager at this time to evaluate your feed needs and price coverage.  This is a great opportunity to develop an execution plan in the event of a market dip from here.  I look for the Sept ‘10 contract to have an early low tomorrow and then firm as the day progresses.  I am of the opinion that we’ve had our lowest close for the week in the Sept ‘10 contract. 

As always make business decisions and develop a risk management plan that will protect the equity that you have in your livestock production.  Find someone that you trust and work with them to develop a plan! 

Bottom line – The intraday charts suggest corn makes an early low tomorrow.  Now is a good time to work with your risk manager to help develop a coverage strategy that fits your operation.

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Meal – My opinion of the meal market hasn’t changed much from last week.  The daily charts portray a short-term top as I see it and has the potential to drop back toward the $286.70 level.  I said last week $285 would be a target but the market has since made a higher high, therefore changing the support point.  Aug ‘10 meal needs to get above $311.50 and close above this level for two consecutive days and then we could have a shot at $316.50 and then into new contract highs from there.  I am of the opinion that we should see a small setback in the Aug ‘10 contract over the next week or two and then begin to move higher again.

Now is a good time to visit with your risk manager to develop a meal coverage plan that is right for you.

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

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Hogs – Hogs nearly fell out of bed today as sell pressure took over.  The Dow Jones was weak early this morning but mounted a comeback later in the trade session adding additional support to tonight’s higher cutout number.  Last week’s close provided the Aug ‘10 contract with a weekly key reversal on the charts but the follow through to the upside has been lacking this week.  The cutout was $1.30 higher tonight which has the market around $.625 higher as I write this.  It looks as if we have done enough to the downside for now and should see better prices tomorrow and Thursday. 

I’m still expecting better prices between now and around Aug 3rd or so.  The long-term hog charts still look good, we haven’t done any long-term damage and it looks like the market is poised to make another move higher as we move forward through the late summer and early fall time period.

Keep making business decisions and protect profits where you can.

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

Check out www.leanhog.net to find numerous USDA reports all in one convenient location.  Become a registered user and have access to pork cutout charts and the USDA 14 day hog slaughter schedule as a percentage of approximate daily kill capacity.

Below are some of the reports that are available as quick links on our home page.  If you would like to become a registered user to access more custom information please click here.

• [500] – Pork Cutout
• [501] – Noon Cutout
• [710] – Estimated Slaughter
• [831] – Cash Summary P.M.
• [711] – Actual Slaughter
  • Livestock & Feed Outlook
  • Monthly Cold Storage
  • Quarterly Hog & Pig Report

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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

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Corn – Thus far we’ve failed to reach the $3.91 resistance area in the Sep contract but it looks like we are poised to make run at it over the next couple of days.  If corn wants to continue to move higher over the short-term the market will need to rally some into Friday.  The rise is the market today gives more credibility to the rally that we have experience thus far as we had a couple of negative days and then come right back in one swift move and wipe away three days of modest trade.

I would strongly suggest having a game plan in place to manage any risk you may have in feed corn.  Will the market go straight up?  I don’t know the answer to that but the fundamental change that we needed to turn the market around came in the month of June so now we have to be on the offensive.  We are getting near some areas of resistance that could propel the market much higher should we break through them.  We could be looking at another .50 cents higher in the Sept ‘10 contract should we close above $3.93 for a couple of days in a row. 

As always make business decisions and develop a risk management plan that will protect the equity that you have in your livestock production.  Find someone that you trust and work with them to develop a plan! 

Bottom line – The intraday charts suggest corn makes an early high tomorrow.  Now is a good time to work with your risk manager to help develop a coverage strategy that fits your operation.

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Meal – Well the meal market got the close above $293.90 last Friday and I said I may have to change my tune about meal.  The daily chart looks toppy and I believe we will see a setback in price in which coverage is warranted.  If you don’t have a plan to buy meal at lower prices you should do so now ESPECIALLY if the hogs you will be feeding the meal to are sold.  $285.00 is a nice area to target for support.

Now is a good time to visit with your risk manager to develop a meal coverage plan that is right for you.

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

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Hogs – A tremendous day in Aug ‘10 hogs to say the least!  Wow, this was a rip your face off type rally with excellent volume.  If we can get Aug ‘10 hogs to close above $82.05 for two consecutive days then we have a legitimate shot at obtaining an $85.00 target area.  The Dollar index remains weak but is showing some signs of slowing its decline based on the daily chart but the longer-term weekly chart still looks ugly (negative) to me.  It is interesting to see the market rally like it has in the face of the cutout being down around $2.50 over the last two business days.

I mentioned last week that it seemed like there were games being played by the packers or whom ever and I still get that feeling like something is going on but we aren’t aware of it just yet.  The huge volume in the Aug ‘10 contract today and the market only broke around $.50 after the cutout was released showing at $.97 lower price from yesterday.  If you don’t have a plan to make some sales in hogs now would be a great time to look at targets above the market to try and catch on any further rallies we may have.

Keep making business decisions and protect profits where you can.

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

Check out www.leanhog.net to find numerous USDA reports all in one convenient location.  Become a registered user and have access to pork cutout charts and the USDA 14 day hog slaughter schedule as a percentage of approximate daily kill capacity.

Below are some of the reports that are available as quick links on our home page.  If you would like to become a registered user to access more custom information please click here.

• [500] – Pork Cutout
• [501] – Noon Cutout
• [710] – Estimated Slaughter
• [831] – Cash Summary P.M.
• [711] – Actual Slaughter
  • Livestock & Feed Outlook
  • Monthly Cold Storage
  • Quarterly Hog & Pig 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.

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

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Corn – Not much has changed from yesterday other than we closed above the $3.76 1/2 resistance level I’ve been talking about.  I will need to see the market close above $3.76 1/2 again tomorrow before I’m comfortable saying that we will continue higher without a small setback.  Assuming a close above $3.76 1/2 again tomorrow our next price target objectives should be $3.831/4, $3.91 and $4.09.  Based on the weekly chart setup I believe that these numbers are attainable at some point in the near future.

Overall the charts look price positive (higher) and with the wet weather around the market may have some weather issues to resolve.  Overall I don’t get too excited about crop disasters from weather because the varieties of corn are getting seemingly better as each year passes.  This doesn’t mean we can’t have some weather related price movement but I usually take it with a grain of salt.

Talk with your risk manager about ways to protect yourself from higher prices in corn! 

Bottom line – The intraday charts suggest corn makes an early low tomorrow.  Now is a good time to work with your risk manager to help develop a coverage strategy that fits your operation.

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Meal – Aug ‘10 meal traded up to and above the $293.90 area  I spoke of yesterday.  If we close above $293.90 this Friday the 9th then I may have to change my tune about my sideways to lower view of the meal market for the month of July.  I still need some confirmation as there is a sell signal setup for tomorrow’s trade.  I have a sell signal at $290.00 stop for the Aug ‘10 meal contract but this a conditional sell signal meaning it is not to be trade with any other order other than a stop order.  If the market doesn’t get to the $290.00 area then the signal is no good.  I’m not recommending a trade, I just want you to be aware of the setup.

Now is a good time to visit with your risk manager to develop a meal coverage plan that is right for you.

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

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Hogs – Aug ‘10 hogs traded both sides of unchanged today but managed to rally and settle higher on the day.  Today is one of those conspiracy days for me.  We had a higher cash market but cutout came in $1.05 lower but the market shows larger bid orders than ask orders.  Hmmmm.  It almost feels like someone is trying to buy more time so they can either reduce their short position or get long the market by spooking it lower to create liquidity for themselves.  It has been quite noticeable over the past couple days that packers are trying to keep the noon cash reports on the defensive but the hogs purchased immediately make you question the validity of the report. 

The dollar remains weak and still has the ability and the likely probability to touch 81.45 and we are currently trading at 83.88.  The weaker dollar should keep some subtle support under the market and keep it from completely falling out of bed should some negative news rear its ugly head.  I’m of the opinion that the market is searching for a reason to bottom, especially with feed prices doing what they are doing and the dollar being weak.

Corn and meal have rallied but hogs have failed to rally along with the feed therefore cutting into some of the nice margins that were available just over a week ago.  Keep making the business decisions!

I would be in talks with my risk manager to develop a sales plan if you don’t already have one to take advantage of any market rallies we may encounter.  Keep making business decisions and protect profits where you can.

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

Check out www.leanhog.net to find numerous USDA reports all in one convenient location.  Become a registered user and have access to pork cutout charts and the USDA 14 day hog slaughter schedule as a percentage of approximate daily kill capacity.

Below are some of the reports that are available as quick links on our home page.  If you would like to become a registered user to access more custom information please click here.

• [500] – Pork Cutout
• [501] – Noon Cutout
• [710] – Estimated Slaughter
• [831] – Cash Summary P.M.
• [711] – Actual Slaughter
  • Livestock & Feed Outlook
  • Monthly Cold Storage
  • Quarterly Hog & Pig 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.

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

___________________________________________________

Corn – Sep ‘10 made an early run higher this morning but then dropped off as the day progressed.  We tested and traded through the $3.76 1/2 number I’ve spoke of recently but failed to close above it today.  This is the first test of the $3.76 1/2 resistance area and it usually the first test is faded by the market and then you “go with” the second test, meaning it should follow through higher.  The hourly charts suggest that we have a small pull back in the corn market but nothing of any significance. 

The daily chart still looks higher into about the 17th of July and then we could take a little longer breather from the move higher.   The weekly chart had a powerful buy signal last week and will be confirmed this week if Friday’s close is above $3.44.  Unless we have a catastrophic event of some sort, it looks like we should close above said level.

Talk with your risk manager about ways to protect yourself from higher prices in corn! 

Bottom line – The intraday charts suggest corn makes an early low tomorrow.  Now is a good time to work with your risk manager to help develop a coverage strategy that fits your operation.

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Meal – Aug ‘10 meal traded just above the most recent high of $290.30 but failed to close near the resistance point.  Not much has changed for me in the way of soybean meal as the cycles look as if we should trade sideways to lower between now and July 30th.  Today was our second close above the $282.20 resistance level which could open the door to $293.90 before we get a nice break in price. 

Now is a good time to look at protecting any profits you have in your crush margin.  I still prefer a known risk strategy with some purchases to mix up the coverage some.  Visit with your risk manager to develop a plan that is right for you.

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

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Hogs – Aug ‘10 hogs were pretty quiet today considering what happened last Friday.  The cycles show us moving higher into July 17th but price action isn’t making a very good case for that argument.  Today’s action was actually a warning sign that the market could be looking for a short-term bottom in this area.  I still believe we should see the market bounce higher over the coming weeks and give producers a good chance to get some nice hedges in place to protect profits.  The U.S. Dollar Index continues to weaken which in due time should bring some strength back to export demand.

Corn and meal have rallied but hogs have failed to rally along with the feed therefore cutting into some of the nice margins that were available just over a week ago.  Keep making the business decisions and lock in good profits when you can and continue to rebuild as much equity as possible.  Even though it would be great to smack a bases loaded home run with super high prices, it may be in your best interest to take some singles and the occasional double and win in the end.

I would be in talks with my risk manager to develop a sales plan if you don’t already have one to take advantage of any market rallies we may encounter.  Keep making business decisions and protect profits where you can.

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

Check out www.leanhog.net to find numerous USDA reports all in one convenient location.  Become a registered user and have access to pork cutout charts and the USDA 14 day hog slaughter schedule as a percentage of approximate daily kill capacity.

Below are some of the reports that are available as quick links on our home page.  If you would like to become a registered user to access more custom information please click here.

• [500] – Pork Cutout
• [501] – Noon Cutout
• [710] – Estimated Slaughter
• [831] – Cash Summary P.M.
• [711] – Actual Slaughter
  • Livestock & Feed Outlook
  • Monthly Cold Storage
  • Quarterly Hog & Pig 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.

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

___________________________________________________

Corn – the Sep ‘10 contract has rallied $.42 1/2 from low to high in the last two days.  We are near resistance of $3.76 1/2 which I believe we will hit tomorrow and stall against for the time being.  In my opinion the market should test $3.76 1/2 and then pause to re-gain some order and then make another push higher.  We have a three day weekend coming up so who knows what tomorrow will bring.

I think we have enough change in fundamental news to continue this rally into the 12th of July or so before we take a serious breather from the higher price movement.  I’ve been saying for sometime to buy calls in corn and purchase physical product hand to mouth until the fundamentals change, well they’ve changed.  I have a big weekly buy signal at $3.45 (see my comments from 06/28/10) and if the Sep ‘10 corn closes above this level NEXT Friday then I’m willing to say I think we have made the low for the year.  It is too premature to say that at this point but the setup is there.

Talk with your risk manager about ways to protect yourself from higher prices in corn!  I’m including my comments from June 28th below

Bottom line – The intraday charts suggest corn makes an early high tomorrow.  Now is a good time to work with your risk manager to help develop a coverage strategy that fits your operation.

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Meal – Aug ‘10 meal had an interesting day yesterday as it traded higher early in the session and then fell like Tipper Gore’s jaw when she found out about hubby Al’s real unconceivable truth.  The weekly charts for soybean meal are beginning to give logic to a semi bearish attitude for the Aug ‘10 contract.  I still need to see the market close tomorrow before I make any final judgment calls here but for now I want to keep a close eye on it.  The Dollar Index fell hard today as stocks rallied off of an early selloff so the weak dollar could help support the meal market longer than the chart would suggest.

Now is a good time to look at protecting any profits you have in your crush margin.  I still prefer a known risk strategy with some purchases to mix up the coverage some.  Visit with your risk manager to develop a plan that is right for you.

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

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Hogs – Aug ‘10 hogs were all over the place today.  Starting the session out on a lower note the market dropped to basically match the low price from the last two trading sessions and then bounced.  That looked positive to me as we made a high of $82.60 but then sold off at the close to be up $.20 on the day at $81.85.  Huh.  The good news here is the market has tested the 62% retracement level the last three sessions but has failed to close below it.  We also closed back above the 50% retracement level which leads me to believe we are poised to make another test of $85.15 in the future.  I would still like to see another close above $81.675 before I get too excited about the $81.675 though. 

The buy signal at $82.20 the other day failed to materialize so now it is back to watching price action against support points to get a feel for direction.  So far we are holding on to the “critical” support areas in the Aug ‘10 contract and I’m of the opinion that we should begin to move higher in the coming week to two weeks which should give us some good opportunities to make some sales against higher prices. 

I would be in talks with my risk manager to develop a sales plan if you don’t already have one to take advantage of any market rallies we may encounter.  Keep making business decisions and protect profits where you can.

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

Check out www.leanhog.net to find numerous USDA reports all in one convenient location.  Become a registered user and have access to pork cutout charts and the USDA 14 day hog slaughter schedule as a percentage of approximate daily kill capacity.

Below are some of the reports that are available as quick links on our home page.  If you would like to become a registered user to access more custom information please click here.

• [500] – Pork Cutout
• [501] – Noon Cutout
• [710] – Estimated Slaughter
• [831] – Cash Summary P.M.
• [711] – Actual Slaughter
  • Livestock & Feed Outlook
  • Monthly Cold Storage
  • Quarterly Hog & Pig 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.