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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 - 01-28-09 - We did it, an up day in hogs!

Jan 28, 2009

Hog Comments - 01-28-09 - We did it, an up day in hogs!



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.
Jeremy Knutson

***NOTICE - I may not have a post tomorrow due to my schedule.***

CORN - March '09 Electronic
Open - $3.78, High - $3.86, Low - $3.72 1/2, Close - $3.84 1/2 Up $.07

March '09 corn did what I thought was going to do today, I expect us to have an early low and a late high which is what happened.  The opening got off to a lower start but it didn't take long for the market to trade in positive territory.  This morning I bought back some of the futures positions I exited last week, made $.05 and exited them because of the way the intra-day charts look.  The futures were purchased against my $3.60 puts that I own so the market couldn't get away from me to the downside.  

It looks like corn should open better tonight and rally early on and then settle into a mixed mode until morning.  The weather forecast for South America dried up some for the weekend but there's still a system coming in next week that is supposed to bring good moisture.  The market will probably keep some premium in the market because of the drier weekend forecast but with next week's system still in play I don't think we will get crazy to the upside.  The reason I purchased corn this morning is because we held the $3.77 number I spoke of yesterday.

Bottom line - with an expected better opening tonight I see the trade making a small move higher and then drift from there.  I see today's high of $3.86 as resistance for tonight and I see support at $3.79 1/4 to $3.77 1/2.  I think we can see $3.79 1/4 but not so sure on the $3.77 1/2 as of yet.  The Dow Jones rallied after the grain markets closed so it may help the commodities remain firm.  $3.77 is still a very key number as far as I am concerned.

 

MEAL - March '09 Electronic
Open - $308.00, High - $314.80, Low - $304.00, Close - $311.50 Up $2.90 

I said yesterday that $292.00 looked like a target area for March '09 meal but we needed to close below $305.00 first.  We got as low as $304.00 today but failed to close below this support number.  Meal was stronger today in conjunction with soybeans and corn based on the South American weather forecast.  I did buy back some of the meal I exited last week and earlier this week.  I averaged a price of $313.00 which is currently above the market.  

I bought the meal futures against the $290.00 puts I have in place to protect the downside of the market if it should continue to drop.  I am still not a fan of meal at this point but with the weather forecast turning drier over the weekend I wanted some of the coverage back in place which is below where I exited my original positions anyway.  

Bottom line - $309.90 and $308.70 are support areas for the market tonight and tomorrow.  I also see today's low of $305 as a support area but I don't think we will get that low unless we see a forecast change.  I think the market will open firmer tonight and make a run toward today's high of $314.80 but I don't think we will get that high.  I think we will have an early high tonight and late low tomorrow.  

 

HOGS - April '09 GLOBEX
Open - $60.80, High - $61.775, Low - $60.40, Close - $61.35 Up $.65

April '09 had a nice little recovery day but it didn't do anything to the charts to make me get too excited about a major rally.  April '09 finally did what I thought it would do today; we had an early low and a late high.  I said yesterday that we could see a retracement up to $61.35 which is exactly where we closed the market today.  I also said we could see more selling below $60.25 (yesterday's low) if we got there but we didn't reach those levels.  

I have a cycle buy area which came in on Monday for the April '09 contract and it has the market rallying into February 11th, 2009.  This doesn't mean it'll happen but it's been a pretty reliable tool over the past year.  Today was the first day since January 6th, 2009 that the April '09 futures have closed above where it opened; and we haven't closed above a previous day's high since January 2nd, 2009!

Bottom line - tomorrow will be important technically for me, I would like to see the April '09 futures close above $61.775 which was today's high.  If we do that it will be the first time since Jan 2nd, 2009 as I mentioned before.  If we can do this we should test $63.07 at some point in the near future.  I see the market as mixed to higher tomorrow so hopefully we get our close above $61.77.  I am looking for an early low and a late high in April '09 futures tomorrow.


NW_LS500
Des Moines, IA     Wed, Jan 28, 2009     USDA Market News

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

Compared to Tuesday's Close:        Fresh bone-in loins unevenly
steady; butts mostly 1.00-2.00 lower; sknd hams 20-27 lbs steady to 2.00 lower;
sdls bellies 14-16 lbs generally steady; lean trimmings mostly 1.00 lower.
Trading moderate, with mostly light demand and moderate offerings.



-----------------------------------------------------------------
Loads PORK CUTS          :            133.38
Loads TRIM/PROCESS PORK  :              20.0
-----------------------------------------------------------------

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
-----------------------------------------------------------------------
01/28       153.4      57.62   76.53   59.88  37.69  99.29 39.41  73.39
Change :               -0.52   -0.25   -1.65   0.73  -1.23 -1.28  -0.49
-----------------------------------------------------------------------

THE CASH PRICE REPORT WAS NOT UPDATED BY THE USDA AT THE TIME OF THIS BLOG POSTING.

 

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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