Hog & Corn Comments – 11/25/09 Hogs trade higher on good volume
Nov 25, 2009
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THERE WILL BE NO COMMENTS THURSDAY OR FRIDAY OF THIS WEEK. There are no markets Thursday and grains and livestock close at noon on Friday.
CORN – Dec ‘09 Electronic
Open – $3.77 1/4, High – $3.93 3/4, Low – $3.77, Close – $3.92 Up $.16
Thoughts – Long Term (into December ‘09) – Sideways/Lower
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Dec ‘09: The corn market did a complete 180 from yesterday. The U.S. Dollar Index made a fresh low today getting things rolling in the overnight session and it carried through to the day session as well. If the dollar closes below 74.679 this week and next, the dollar could be in serious trouble. If the dollar does continue its decline we should see more fund buying come into the market which will create more volatility.
For now the same rule applies for me, $4.13 1/2 is the area Dec '09 corn has to close above before I get excited about another big move higher. Fundamentally I'm not bullish at these levels but the outside influences have more money than those that trade fundamentals therefore they move the market. I still have some negative setups on the weekly chart for Dec '09 corn as long as we close below $4.03 on Friday.
Today's trade was very thin as a lot of people who are normally in the market are taking time off for the holiday so it is easy for a market to get volatile when there are fewer participants. The market made it back above the key level of resistance at $3.84 1/4 so this area will now become support once again. We are still on the sideline with corn at this time and will be here until the market tells us differently. If you have good margins in hogs purchased don't waste time, lock in your profits and use options for opportunity if it works for you.
Bottom line: I am looking for the market to experience an early low on Friday.
Dec ‘09 Corn – Support/Resistance for 11-27-09
(R3) Resistance 3: $4.21
(R2) Resistance 2: $4.04 1/4
(R1) Resistance 1: $3.98 1/4
Today’s close: $3.92
(S1) Support 1: $3.81 1/4
(S2) Support 2: $3.70 3/4
(S3) Support 3: $3.62
MEAL – Dec ‘09 Electronic
Open – $315.70, High – $319.90, Low – $312.50, Close – $318.00 Up $2.60
Thoughts – Long Term (into November ‘09) – Sideways/Lower
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Dec ‘09 meal: Meal started off higher then sold off but found support around noon and traded higher into the end of the day. The Dec '09 contract is looking like it is prepared to top but once again it is hard to make that case with the fund buying that has taken place. The dollar dropped hard after the grain session close which should add to the trader's appetite for commodities. I don't have much more to say about meal other than watch the dollar as it's at an important level.
Technically speaking, even though the market seems balanced, the overall look of the way we have traded the last several days makes me think we are still vulnerable to a retracement to lower levels. We are still on the sideline in meal and will continue to be for now.
Bottom line: I’m looking for the market to experience an early low on Friday.
Dec ‘09 Meal – Support/Resistance for 11-27-09
(R3) Resistance 3: $332.00
(R2) Resistance 2: $324.40
(R1) Resistance 1: $321.20
Today’s close: $318.00
(S1) Support 1: $313.60
(S2) Support 2: $309.20
(S3) Support 3: $301.60
HOGS – Dec ‘09 GLOBEX
Open – $59.00, High – $60.075, Low – $58.825, Close – $59.425 Up $.80
Thoughts – Long Term (into December) – Neutral
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Hog margins are starting to show some good profit for the coming year. If you would like to run a profitability crush for your operation, email us at firstname.lastname@example.org.
Dec ‘09 hogs: The Dec '09 hogs are on a roll! We had good volume for a day before a holiday trade. The cash prices were once again higher at noon along with an encouraging cutout report. I would expect both cash and cutout to be higher tonight and I believe that is what the market was trading today as well. If the Dec '09 contract closes above $59.225 on Friday and preferably next Friday too, we could see a test of $64.675 which is our next probable target.
Like a broken record, the dollar is a key player in higher hog prices. If the dollar continues its weakness we could see additional buying in hogs. This may also be a great opportunity to scale into some sales if you can make a profit. Pardon the pun but I wouldn't go hog wild with sales unless you are wildly profitable. The dollar is at a VERY key level and needs to rally back above 74.679 by next Friday otherwise we could see it start another leg lower toward 70.69.
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 so we have downside risk protected in the market and the upside opportunity is completely open.
Bottom line: I’m looking for an early high on Friday.
Dec ‘09 Hogs – Support/Resistance for 11-27-09
(R3) Resistance 3: $61.925
(R2) Resistance 2: $60.70
(R1) Resistance 1: $60.05
Today’s close: $59.425
(S1) Support 1: $58.80
(S2) Support 2: $58.20
(S3) Support 3: $56.925
(S4) Support 4: N/A
(S5) Support 5: N/A
(S6) Support 5: N/A
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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.