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CORN – July ‘09 Electronic Open – $4.08, High – $4.08 3/4, Low – $4.01 3/4, Close – $4.03 1/4 Down $.04 1/2
Thoughts – Long Term (Into September ‘09) – Bullish/Higher
Yesterday I said: “July ‘09 corn need to stay above the $4.00 1/2, 62% retracement level if it had any chance at holding off any further declines. From a technical perspective, July corn had a very good close today as it tested the $4.00 1/2 by making a new low at $3.97 3/4 and bouncing right back up to close near the high of the day. This type of action is characteristic of a market looking to find a bottom for the most current move. I am looking for corn to open steady to lower tonight and have a small setback before it finds support once again and makes a charge higher tomorrow. If the July ‘09 contract gets back above $4.10 (50% retracement level) and closes there for two consecutive days then I feel more confident in saying we could make another run toward $4.50.
I am expecting tomorrow to have buy stops around $4.09 1/2 to $4.10 which is where our resistance level is at; if we can break through this level we should see follow through buying and take us higher on the day. Although it is early to make this statement but it feels like today may have stopped the decline in corn prices and if we can get a close above $4.08 3/4 (I prefer $4.10) for the day I will feel much better about saying we have bottomed for this most recent downward move. The funds have liquidated around 18,000 contracts of corn since last Friday (they were net buyers today) but they still hold on to approximately a 190,000 contract net long position.”
July ‘09 corn: I was looking for more upside today but didn't get it, the market had relatively low volume and backed off more than it gained yesterday but still closed above the $4.00 1/2, 62% retracement support level. We tested yesterday's high and matched it but didn't get above it to trigger the stops that I believe were around $4.09 1/2 to $4.10. The July '09 contract did seem to have good support at $4.03 1/4 which is where we settled for the day.
I am looking for the July '09 contract to move sideways to lower tonight while it looks for some more news. The U.S. military is monitoring a North Korean ship that they feel is transporting weapons and if anything happens to escalate the tension between North Korea and the U.S. then we may see a jump in oil prices and in theory that would be friendly to corn. This story is in its early stages from the public's view point so it is hard to tell the market affect with such little information at this point.
I still look for buy stops at $4.09 1/2 to $4.10 but we need to get there first. If the July '09 corn market closes below $4.00 1/2 for two consecutive days then I am looking for a test of the low at $3.70 but for now support is holding. Again, it was a low volume day today and tomorrow is Friday and that should give us some insight to how people feel going into the weekend after a week of trading that has lost ground.
Bottom line: I am looking for the market to experience an early low tomorrow.
July ‘09 Corn – Support/Resistance for 06-19-09
(R3) Resistance 3: $4.11
(R2) Resistance 2: $4.08 3/4
(R1) Resistance 1: $4.05 1/4
Today’s close: $4.03 1/4
(S1) Support 1: $4.01 1/2
(S2) Support 2: $3.97 3/4
(S3) Support 3: $3.96
MEAL – Aug ‘09 Electronic
Open – $372.80, High – $380.20, Low – $371.50, Close – $377.40 Up $4.30
Thoughts – Long Term (Into September ‘09) – Bullish/Higher
Yesterday I said: "I said Monday that we had a buy signal at $371.50 if the market made a new low below $370.50 which it did yesterday and it triggered the buy stop at $371.50. The risk management sell stop should be $1.00 below the most current low at the time of the fill, the current low at the time was $366.10 so the risk management sell stop should be at $365.10 for now and then trail that stop $1.00 below the prior day low until an upside target is met or the sell stop is triggered. If this signal is good it should produce a violent move higher in the August meal contract.
I haven’t adjusted my positions at all as I still have my $360.00 August calls in place with upside to $400.00 in the August contract for now. I am looking for more upside in the August contract tomorrow and I believe we could see buy stops above the market near the $376.50 area."
Aug ‘09 meal: The buy signal from the other day was good at $371.50 and I said to have the risk management sell stop at $365.10 and I said to trail it up with a sell stop $1.00 below the prior day low. For tomorrow that would mean having a sell stop at $370.50 which is $1.00 below today's low price. The August '09 meal contract closed above the 50% retracement resistance level of $376.80 today and if we do it again tomorrow then I would venture to say we should look to test $396.80 again in the not so distant future.
The funds were buyers of approximately 1,000 contracts of soybean meal today and hold a rather lengthy position at this time. The U.S. Dollar Index traded both sides of unchanged today but moved higher on the day and looks like it may have some more room to the upside tomorrow early before taking a break.
Bottom line: I’m looking for the market to experience an early high and a late low tomorrow.
Aug ‘09 Meal – Support/Resistance for 06-19-09
(R3) Resistance 3: $382.50
(R2) Resistance 2: $380.20
(R1) Resistance 1: $378.60
Today’s close: $377.40
(S1) Support 1: $375.90
(S2) Support 2: $374.80
(S3) Support 3: $371.50
HOGS – Aug ‘09 GLOBEX
Open – $58.75, High – $59.35, Low – $58.20, Close – $59.15 Down $.40
Thoughts – Long Term (Into August) – Friendly
Yesterday I said: “Ouch, the cutout came in $2.77 lower this afternoon and the market immediately sold off in extended hour’s trade but then seemed to find some support around $58.80 and bounce back. Hmmmm, I have a cycle low projected for tomorrow on the daily chart but with this news coming out it makes me wonder how accurate it will be. Loins and hams took a bath today which is the reason for the lower cutout. If the market shrugs this lower cutout number off tomorrow then that would be the nail in the coffin to say the market could be done to the downside for now.
It is interesting to see bids appear when this negative news comes out, like someone is trying to bait us with negative information so they can buy back short positions without it pushing the market a lot higher. The reason I point this out is because I doubt speculators are coming in buying the market by 10’s and 20 lots after a cutout number like this is posted, it is almost as if someone knows something just like if this number is for real I would think that someone would’ve had leaked information today during the day session. I ended up selling some July futures within seconds of the cutout number being released just to give me a head start going into tomorrow’s session. I may exit them tomorrow if there is no need for them.”
Aug ‘09 hogs: Interesting to note that I wasn't the only person thinking yesterday's cutout number was as sham. I spoke with several different people and that seemed to be the general feeling across the board, we've been duped! I said yesterday that I sold some July hogs after the negative cutout was released but I bought them back this morning when the market moved higher instead of lower on the open. It seems as if someone is trying to exit their short positions without creating a big splash and up move in the market and that is one way to do it, on negative news.
Well with all of the complaining out of the way, my cycle low was set for today and I could even argue tomorrow but none-the-less it is in this time-frame. It is premature from a chart point to say the bottom is in but based on the way the market is acting especially with the buying that absorbed a fictitious cutout number from last night I would say may be looking at brighter days ahead in the hog futures. I am not forecasting a runaway upside move by any stretch because we need cutout and cash to start moving higher but the significant downside futures pressure may be over for the time being. I will look for the second day that we close above a prior day high to give me more confidence in this thought, yesterday was the first time we did it since May 8th, 2009.
On a side note, the Producer Retirement Program had a press release today saying the program was terminated. You can read the release by clicking here.
Bottom line: I’m looking for the market to make an early high tomorrow.
Aug ‘09 Hogs – Support/Resistance for 06-19-09
(R3) Resistance 3: $60.80
(R2) Resistance 2: $60.325
(R1) Resistance 1: $59.675
Today’s close: $59.15
(S1) Support 1: $58.625
(S2) Support 2: $58.40
(S3) Support 3: $57.625
Click here to view cash and cutout reports
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