Jeremy Knutson
1-877-212-2564
jknutson@hurleyandassociates.com

I said yesterday that I thought the market would open weaker last night and end its weakness prior to the day session open today.  I also said I thought we could test yesterday's low of $3.81 3/4 which we did today by making a low of $3.80 and then moving higher from there.  The market closed around .05 higher in the overnight session but opened the day session around 1/2 cent lower and was weak most of the day.  

I was impressed with the market rallying into the close of the day session because the U.S. Dollar Index was trading higher by around 95 points and crude oil was down approximately $2.00.  There volume today was rather weak coming in around 62,800 contracts in the March '09 electronic contract.  We were trading over 100,000 consistently during some of our up days in the recent rally.  

Bottom line - It looks like we should make a test of $3.94 1/2 either tonight or tomorrow and I wouldn't be surprised to see a run back toward the $4.02 1/2 area although I am not as confident of the $4.02 1/2 number as I am the $3.94 1/2.  The market has rallied on the close the last two days and it makes me think this rally may not be over.  I expected more of a correction that we have gotten but I am not sure we will go much lower on this break.

MEAL - March '09
Open - $263.80, High - $266.80, Low - $260.60, Close - $266.60.

I said yesterday I thought Jan '09 meal would test the $260.60 to $259.70 and our low was $260.50 so it went .10 cents through my support point and rallied from there.  I also said if we stayed above $260.60 we could test yesterday's high of $265.00 which we did today by topping out at $266.60.  I also said yesterday the U.S. Dollar had support at 77.88 and today's low was 77.688 at which point the market reversed and moved higher, it is currently trading at 79.90 so the support has held thus far. 

I said yesterday that I was cautious of soybean meal but I could change my mind at the drop of a hat.  The hat fell today, I re-entered the March '09 meal market at $263.00 to get long again.  I still see signs of warning on the daily chart but the market isn't breaking.  The trouble with warning signs is that they are not sell signals they are just warnings so it doesn't mean the market will absolutely reverse.  I will stay with this position for now but I am watching it closely.

Bottom line - I expect a possible test of $264.10 either tonight or tomorrow but I don't think we are going to completely fall apart.  The Crude Oil market made new lows again today and closed down $3.50ish at $36.47.  The market didn't seem to care that the dollar was rallying and crude was sinking because meal also rallied into the close.  I look for better markets tomorrow based on momentum but the daily charts still show caution.  Keep upside coverage in place for now.

HOGS - Feb '09 Pit contract
Open - $62.40, High - $62.80, Low - $62.20, Close - $62.47.

Feb '09 hogs had ANOTHER quiet day of trade with a $.60 trade range.  There really isn't a lot going on in the hog market right now, the cutout was down yesterday again but the market didn't seem to care.  I said yesterday I thought the market would put in an early low and a late high in today's trade which was exactly the case, the low was set during the first hour of trade and the high came in the last hour of trade.  

I am still not bearish hogs here even though the cash fundamentals aren't that great.  Again, I use charts to make my decisions so the cash fundamentals are not a large portion of my formula for an opinion of the market.  There are smarter people out there that make the news and should be in the market prior to everyone else anyway so I figure I will look to those guys for info.  As I don't know them personally I use charts to try and get a handle on their trade activities.

Bottom line - There is one concerning item on the GLOBEX Feb '09 chart that I see for tomorrow and Monday, if the market moves above $63.00 and then back down below it there is a sell signal at $62.75 on a stop.  I am not going to take this trade for other reasons but it doesn't negate the fact that it is there.  I expect a run at $63.00 tomorrow but I look for $64.00 in the near future.

Des Moines, IA     Thu, Dec 18, 2008     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 not tested; butts
steady to weak; sknd hams mostly 2.00-3.00 lower; sdls bellies 14-16 lbs
weak to 2.00 lower; sdls bellies 14-16 lbs not established; lean trimmings firm.
Trading slow, with light demand and light to moderate offerings, except for
sknd hams which had heavy offerings.


-----------------------------------------------------------------
Loads PORK CUTS          :              61.5
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
-----------------------------------------------------------------------
12/18        67.5      57.82   78.08   63.90  41.21  92.22 39.70  69.53
Change :                1.49   -0.12   -1.23   4.66   1.45  2.46   2.68
-----------------------------------------------------------------------

Des Moines, IA     Thu, Dec 18, 2008     USDA-IA Dept of Ag Market News

National Direct Hog Price Comparison

--------------------------------------------------------------------------
                :  National   :    Iowa     :   Western   :   Eastern
                :             :  Minnesota  :  Cornbelt   :  Cornbelt
--------------------------------------------------------------------------
   Base Price is the price from which no discounts are subtracted and
   no premiums are added.
--------------------------------------------------------------------------
BARROWS & GILTS :   .64 lwr   :   .95 lwr   :   .96 lwr   :   .81 lwr
Negotiated      :             :             :             :
CARCASS BASIS   : 42.50-54.15 : 42.50-52.70 : 42.50-52.70 : 46.00-54.15
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    51.65    :    50.70    :    50.94    :    52.23
--------------------------------------------------------------------------
Head Count      :   16,739    :    5,076    :    7,873    :    8,126
==========================================================================

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.

Jeremy Knutson
1-877-212-2564
jknutson@hurleyandassociates.com

I was out of the office yesterday so I didn't have any comments for you but I will tell you that I didn't expect yesterday's action.  I expected more of today's action to come yesterday however it didn't and we saw it today.  The market had a wild ride today as OPEC announced they will cut oil production by 4.2 million barrels per day from SEPTEMBER levels or 2.2 mbpd from current levels.  There was a major financial network that reported the cut at 4.2 mbpd for around 3-5 minutes before making the correction that it was 2.2 mbpd from current levels.  

Why do I bring this up you ask?  The crude oil market was down around $1.50 when the news broke and within seconds it was up $.50 or so and it took corn from around .04-.05 lower to up .04-.05.  Once the actual news was reported that it was 4.2 mbpd from Septembers levels and not current levels the markets backed off considerably.  Corn traded as much as $.12 1/4 lower at one point today before recovering into the close.

I fell prey to the news announcement as I entered the market again to maintain feed coverage although I do have puts below the market to protect the downside risk.  It was my plan all along to re-enter but the news helped the decision as it was sizable enough to move the market.  I still have my positions in place and will hold them for now.  The market retraced 62% ($3.81 1/4) of yesterday's move and closed above the 50% ($3.85) retracement level which would suggest another test of the overnight high is possible. 

Bottom line - I expect the market to open weaker tonight and test today's session low of $3.81 3/4 before finding support.  I think the weakness will come to an end before the market open tomorrow.  It could be one of those days where we gap open lower (from an intra-day perspective) and then move higher.  No major levels of support were broken today.

MEAL
Open - $262.00, High - $265.00, Low - $256.10, Close - $263.20.

I am still neutral on meal as technically it didn't look very good to me at the moment.  The market gave us a warning sign on Monday and then yesterday was a solid day of trade but today is another warning signal for Jan '09 meal.  I think I will be sitting on my hands in the meal market for now but may change my mind at the drop of a hat.  

The U.S. Dollar Index is dropping hard again today, I must sound like a broken record but it has failed to find support.  77.88 is the 62% retracement level from the low at the beginning of the rally to the high, we are currently trading at 78.51 as I write this.  The next level of support if 77.88 is breached is 77.40 which isn't far below the retracement level and then down to 75.89 and finally back to the low for the move at 71.31.  

Bottom line - I expect the Jan '09 meal to test $260.60 to $259.70 tonight and then find some support.  If the market stays above $260.60 then we could make a run at today's session high of $265.00 but I am in the be cautious camp based on the look and feel of the daily chart.  I still want meal coverage in place because of the falling dollar; I think it is only a matter of time before we make a good run higher.

HOGS
Open - $62.05, High - $62.70, Low - $61.95, Close - $62.625.  - Hog pit

It was an impressive trade day in hogs as far as I am concerned.  The market basically shrugged off the $2.30 lower cutout number from last night as well as some $2.50 + lower cash prices in the USDA noon report which is typically exaggerated one way or the other anyway and I guess the market is well aware of that.    The buying in the Feb '09 contract came later in the day which is a positive sign.

The cash market wasn't down as much as the noon report suggested and the cutout was down $.65 today but not near as much as yesterday's number.  I expect hogs to open a little better tonight and maybe trade lower toward $62.42 to $62.30 before finding some support.  My cycle indicator has the Feb '09 contract bottoming on the daily chart Friday of this week.  This is an indicator not a crystal ball so keep that in mind while making decisions, never base it all on one single indicator or you could be a stuck pig!

Bottom line - I think we will trade better tomorrow as the session progresses and like I said last week, the hog market has yet to respond to the weak dollar and it is only a matter of time before it does.  I am looking for an early low tomorrow and a late high.

Des Moines, IA     Wed, Dec 17, 2008     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 loins unevenly steady;
butts 1.00-3.00 lower; sknd hams 17-23 lbs 4.00 lower, 23-27 lbs 2.00-7.00 lower;
sdls bellies not established; lean trimmings steady to weak. Trading slow, with
mostly light demand and light to moderate offerings, except for sknd hams which
had heavy offerings.


-----------------------------------------------------------------
Loads PORK CUTS          :              76.5
Loads TRIM/PROCESS PORK  :              13.0
-----------------------------------------------------------------

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
-----------------------------------------------------------------------
12/17        89.5      56.33   78.20   65.13  36.55  90.77 37.24  66.85
Change :               -0.65    0.39    1.04   0.05   0.55 -3.73    unc
-----------------------------------------------------------------------

Des Moines, IA     Tue, Dec 16, 2008     USDA-IA Dept of Ag Market News

National Direct Hog Price Comparison

--------------------------------------------------------------------------
                :  National   :    Iowa     :   Western   :   Eastern
                :             :  Minnesota  :  Cornbelt   :  Cornbelt
--------------------------------------------------------------------------
   Base Price is the price from which no discounts are subtracted and
   no premiums are added.
--------------------------------------------------------------------------
BARROWS & GILTS :   .11 lwr   :   .16 lwr   :   .47 lwr   :   .35 hgr
Negotiated      :             :             :             :
CARCASS BASIS   : 43.00-55.50 : 43.00-54.39 : 43.00-54.39 : 44.00-55.50
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    53.30    :    52.81    :    52.82    :    53.99
--------------------------------------------------------------------------
Head Count      :   20,801    :    9,502    :   12,262    :    7,552
==========================================================================

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.

 Jeremy Knutson
1-877-212-2564
jknutson@hurleyandassociates.com

THERE WILL BE NO COMMENTS TOMORROW AS I WILL BE OUT OF THE OFFICE ALL DAY.

CORN
Open - $3.74, High - $3.93 1/4, Low - $3.73 1/2, Close - $3.75 1/4

After seeing March '09 corn up .11 to .13 cents last night I figured the March '09 corn was going to have the trade action it did today.  With this in mind I exited some long futures positions last night with anticipation of the market moving lower today.  I have orders to get back long corn toward the $3.65 support area if we get there.  Usually when we get big openings one way or the other at what could be the end of a move, we tend to overdo it.  Today we did just that, most of the excitement was during the first 30 minutes of trade. 

The crude oil market was up around $3.50 prior to the 9:30 a.m. corn open and when the grain market closed this afternoon crude was down around $1.50.  I REALLY didn't like the way corn traded today, it left a sign of warning and I expect sell stops to be triggered below today's low of $3.73 1/2.  It looks as if we could begin a correction in the March '09 corn and move back toward $3.60 and then down to $3.50 which would be a 50% retracement of our rally.

Bottom line - I feel like we could open lower tonight and continue lower because of the selloff we had late in the day.  We traded as much as .19 3/4 cents higher today but could only manage to close .01 3/4 higher on the day?  Not so good.  I look for weakness in the March '09 corn tomorrow and expect a test of $3.65 to $3.58.  On a positive note, the U.S. Dollar is still nose-diving which will be positive for commodities longer-term.  I still want protection for feed needs, this hasn't changed.  I altered my position because I am trying to protect equity and I plan to re-enter at a lower price or above today's high if I am wrong.

MEAL
Open - $257.00, High - $263.00, Low - $254.50, Close - $256.80

I will now base my comments on March '09 soybean meal instead of January because January has little time left in the contract.  I exited my meal positions last night like I did with corn; I want to re-own these positions at a lower price or above today's high whichever comes first.  As I stated in my corn comments the U.S. Dollar Index is falling apart faster than a $2.00 suitcase, as a friend of mine would describe it. 

March '09 meal closed at $257 which is above the 50% retracement level of $255.90 and if we stay above $255.90 we should make another run at last night's high of $263.00.  As I said in corn I am not impressed at all with the trade action today, we were up $6.00 today and ended up closing down $.20.  Not impressed!  The trade today is consistent of that with tops in markets, now I am not saying the meal market is done at all but I am saying I am looking for a correction before we make our next leg up. 

Bottom line - I am expecting a lower market in March '09 meal tomorrow and I am also looking for a test of $255.90 and ultimately $250.00 in the near future.  The Dow Jones and crude oil have both dropped off since the meal market closed at 1:15 p.m. cst and that should bring some weakness to the overnight trade.  Lower trade tomorrow is my thought.

HOGS
Open - $62.50, High - $62.85, Low - $62.37, Close - $62.57

Feb '09 hogs had a whopping $.47 trade range today.  Day traders are going to be switching from prime rib to noodle soup after a trade range like todays!  It seems to me the downside test will be complete if we can close the Feb '09 futures above $63.00 again in the near future.  I look for the market to be firm tomorrow based on technical considerations.  If we can get back above $63.00 then I think we test $64.30 to $65.00 in the Feb '09 contract.

The hog market STILL hasn't responded to the falling dollar during the past week as well as today.  Like I said last week, it is only a matter of time before it kicks in and we see exports pick up.  Maybe the government bailing everyone out is a back handed bail out to the Ag sector by crushing the dollar and making our Ag products look more attractive to the international market.  

Bottom line - I expect hogs to be higher tomorrow but after the trade we have had the last couple days I wouldn't be surprised if it is quiet.  I still think we will test our most recent high of $67.00 in the near future and I believe we will still see the $70's at some point in the coming months.  I'm looking for better trade tomorrow and we could see resistance come in around $63.40 and then up to $64.52 although unlikely to see the $64.52 tomorrow.

Des Moines, IA     Mon, Dec 15, 2008     USDA Market News

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

Compared to Friday's Close:         Fresh loins steady; butts weak
to 1.00 lower; sknd hams 17-23 lbs not tested, 23-27 lbs weak; sdls bellies
steady; lean trimmings unevenly steady. Trading slow, with light to moderate
demand and offerings.



-----------------------------------------------------------------
Loads PORK CUTS          :              42.5
Loads TRIM/PROCESS PORK  :              19.0
-----------------------------------------------------------------

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
-----------------------------------------------------------------------
12/15        61.5      59.28   74.19   66.11  36.72  87.80 53.32  66.88
Change :               -0.76    0.73   -0.72   0.11   0.16 -3.24  -0.52
-----------------------------------------------------------------------

Des Moines, IA     Mon, Dec 15, 2008     USDA-IA Dept of Ag Market News

National Direct Hog Price Comparison

--------------------------------------------------------------------------
                :  National   :    Iowa     :   Western   :   Eastern
                :             :  Minnesota  :  Cornbelt   :  Cornbelt
--------------------------------------------------------------------------
   Base Price is the price from which no discounts are subtracted and
   no premiums are added.
--------------------------------------------------------------------------
BARROWS & GILTS :   .07 lwr   :   .49 lwr   :   .24 lwr   :   .22 hgr
Negotiated      :             :             :             :
CARCASS BASIS   : 42.50-55.25 : 42.50-55.25 : 42.50-55.25 : 45.50-55.00
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    53.44    :    53.01    :    53.33    :    53.57
--------------------------------------------------------------------------
Head Count      :   19,939    :    8,991    :   12,650    :    6,199
==========================================================================

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.

Jeremy Knutson
1-877-212-2564
jknutson@hurleyandassociates.com

March '09 corn was called 10-20 lower this morning on a bearish monthly crop production report put out by the USDA.  The 2008-09 carryout number increased from 1.124 billion bushels on Novembers report to 1.474 on today's report which was above the average trade estimate of 1.232 billion bushels.  The market has moved down so far that this news just didn't seem to matter today.  Again, as I said the other day we had a good volume day on Monday when the market was initially up strong and has since followed through.  

I don't think we are off to the races but if the U.S. Dollar Index keeps fading as fast as it has this week I am more and more certain the bottom is in for corn.  We have not violated a prior day low since last Friday's sell off.  When looking at the weekly chart this trade action is quite friendly in my opinion, we are taking back all of the losses we were dealt last week as a market.  If I remain friendly I need to see the market close above $3.40 tomorrow but preferably up around the $3.50+ area.  

Bottom line - I think the market will open slightly lower tonight and then make a small charge higher but I don't think we will take out today's high of $3.57 3/4.  I think tomorrow could be a profit taking day for the market and all of those who got in on Monday and are still in.  Outside of a meltdown tomorrow this week has been a big positive on the charts for continuation to the upside.  We need a close above $3.40 tomorrow for me to be very confident.  I expect a test of $3.45 3/4 to $3.48 tomorrow and we should find support in that area. 

MEAL
Open - $248.30, High - $257.20, Low - $245.10, Close - $256.30

Jan '09 meal struggled on the early on today because at 10:30 a.m. it was trading below where it opened (the day session open).  80% of the time the market will close the day in the direction of the first hours price action, which was negative this morning meaning statistically we should have closed below $250.60 (this is the day session open, the open listed above is from the electronic open from last night) but we failed to do so.  This is a positive sign as well.

Bottom line - I expect meal to retrace back to $252.40 to maybe even $251.20 before we find good support.  It looks like Jan '09 meal will be the same as March '09 corn tomorrow, I am looking for some position evening going into the weekend.  Also like the corn chart the weekly chart looks awfully friendly if we have a close above $250.00 in my opinion.

HOGS
Open - $62.20, High - $62.60, Low - $61.55, Close $62.37

Feb '09 hogs blew through my $63.00 support level I talked about the other day.  I thought we would see support at $63.00 but it failed to hold.  We had support this morning at $61.60 and the low was $61.55 so we touched it, held and firmed into the close.  The very weak U.S. Dollar Index didn't seem to have an effect on the hogs today or much of this week for that matter.  I think it is only a matter of time before it all sinks in.  

As I have said before I am not bearish hogs (or corn or meal) at these levels and if you are short futures I would cover them with a call option to protect any equity you may have gained.  I am still looking for the market to bounce back toward the $67.00 level in Feb '09 but ultimately reach the mid/lower $70's in the coming months.

Bottom line - the cash was weaker today and cutout regained some of its loss yesterday by closing up .21 for the day.  I look for support tonight/tomorrow around $62.05 to $61.95 and then bounce from there.  The weak dollar is going to buoy prices at some point so be prepared if you have a major short position.  I am not saying lift hedges but cover your gained equity with a call option or some other means of protection.  I think we could make new highs above $62.60 during tomorrow's trade.

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
-----------------------------------------------------------------------
12/11        52.5      60.27   73.11   67.81  36.62  87.80 55.25  70.63
Change :                0.21    0.44   -1.47  -4.55  -0.03  2.69    unc
-----------------------------------------------------------------------

Des Moines, IA     Thu, Dec 11, 2008     USDA-IA Dept of Ag Market News

National Direct Hog Price Comparison

--------------------------------------------------------------------------
                :  National   :    Iowa     :   Western   :   Eastern
                :             :  Minnesota  :  Cornbelt   :  Cornbelt
--------------------------------------------------------------------------
   Base Price is the price from which no discounts are subtracted and
   no premiums are added.
--------------------------------------------------------------------------
BARROWS & GILTS :   .82 lwr   :   .71 lwr   :   .69 lwr   :  1.10 lwr
Negotiated      :             :             :             :
CARCASS BASIS   : 44.50-55.25 : 46.00-55.25 : 46.00-55.25 : 44.50-55.03
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    53.69    :    53.50    :    53.77    :    53.50
--------------------------------------------------------------------------
Head Count      :   20,327    :    7,373    :   10,851    :    8,726
==========================================================================

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.

Jeremy Knutson
1-877-212-2564
jknutson@hurleyandassociates.com

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
-----------------------------------------------------------------------
12/09       117.6   ***60.81   73.88   69.10  36.50  87.70 57.76  68.19***
Change :               -0.27    3.42   -0.19  -2.82   0.95  0.45  -6.00
-----------------------------------------------------------------------

National Direct Hog Price Comparison

--------------------------------------------------------------------------
                :  National   :    Iowa     :   Western   :   Eastern
                :             :  Minnesota  :  Cornbelt   :  Cornbelt
--------------------------------------------------------------------------
   Base Price is the price from which no discounts are subtracted and
   no premiums are added.
--------------------------------------------------------------------------
BARROWS & GILTS :   .71 hgr   :  1.01 hgr   :   .85 hgr   :   .46 hgr
Negotiated      :             :             :             :
CARCASS BASIS   : 44.25-57.00 : 46.00-57.00 : 46.00-57.00 : 44.25-56.08
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    54.97    :    55.09    :    55.02    :    54.86
--------------------------------------------------------------------------
Head Count      :   28,601    :   15,283    :   19,566    :    8,635
==========================================================================

Jeremy Knutson
1-877-212-2564
jknutson@hurleyandassociates.com

CORN
March '09 corn didn't waste time deciding which direction it wanted to go today, it opened $.14 1/4 higher and it was the low of the day session.  Crude Oil and the Dow Jones had some influence on the corn this morning as they were both trading better on the day by the time corn opened.  It looks to me as if we should try to test $3.36 3/4 which is 50% of last week's trade range and then from there we look to $3.44 1/4 and then $3.68 1/2. 

 If we close above $3.30 1/2 by a few cents tomorrow I think we could look for a quick test of $3.54 1/2 before the market finds any good selling.  There is the resistance at $3.40 that I talked about early last week (it was support then) that we would still need to get through prior to making a solid run at $3.54.  The U.S. Dollar Index was down today and continues to look like it is topping in this area therefore I am looking to make sure I have significant feed corn coverage in place through an option strategy because this market will keep moving higher one of these days!

Bottom line - I have said before I am not bearish at these levels although the market has dropped further than I expected.  I still want to have good feed coverage in place for when the market gets going to the upside again. Today is only one day and we need to see good follow through before I am getting too excited about major upside in the market.  I do not want to be caught in the dark without coverage though, we have been screaming as livestock producers over the past year for cheap feed prices so let's not let it pass us by!  I look for better trade tonight and tomorrow and follow through on today's rally.  I wouldn't be surprised to see a test of $3.40 tonight or tomorrow in the March '09 corn.

MEAL
Jan '09 meal had strength for the same reason corn, it was because of higher Crude Oil futures and Dow Jones index.   I feel we could see the market test $244.40 early and then rally toward the $249.70 high we had today.  As I have said for awhile now (what turned out to be too early) I am not bearish at these levels and I would have call coverage in place for meal needs for a significant amount of time.

Bottom line - I look for a possible test of $244.40 tonight and then a test of $249.70 again either late tonight or tomorrow.  The market will also take direction from the Dow Jones and Crude Oil but both of which had a solid close today.  I expect higher follow through trade tomorrow in the Jan '09 meal contract.

HOGS
Feb '09 hogs opened $.10 lower in the pit and had a high of $65.40 but the Globex contract had a high of $66.475 which put the market up over $2.25 in the early part of trade.  The Globex contract didn't stay that high for very long and as stated the pit trade didn't get near that high so it must have been a market order and no liquidity that brought the market to those levels.  

Cash hogs didn't do much of anything today as it was slightly lower and cutout was down $.69 for the day.  I expect the market to make a run at $64.40 and if we can close above it tomorrow I think we will head toward our high of $67.15.

Bottom line - I am looking for steady to better trade tomorrow in the Feb '09 contract.  The U.S. Dollar Index is down hard today and I am still of the opinion that the Dollar will continue its slide in the future.  I look for a test of $63.92 early and if that fails to hold then test $63.00 but I don't think $63.00 is likely.  I look for a test of $65.40 tomorrow more than a test of $63.00.  Bottom line is better trade tomorrow.

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
-----------------------------------------------------------------------
12/08        71.1      61.08   70.46   69.30  39.32  86.75 57.31  74.19
Change :               -0.69   -2.04    1.25  -1.05    unc -0.41  -0.51
-----------------------------------------------------------------------

National Direct Hog Price Comparison

--------------------------------------------------------------------------
                :  National   :    Iowa     :   Western   :   Eastern
                :             :  Minnesota  :  Cornbelt   :  Cornbelt
--------------------------------------------------------------------------
   Base Price is the price from which no discounts are subtracted and
   no premiums are added.
--------------------------------------------------------------------------
BARROWS & GILTS :   .06 lwr   :   .13 lwr   :   .02 lwr   :   .17 lwr
Negotiated      :             :             :             :
CARCASS BASIS   : 45.50-56.00 : 50.00-56.00 : 47.00-56.00 : 45.50-56.00
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    54.24    :    54.09    :    54.17    :    54.33
--------------------------------------------------------------------------
Head Count      :   21,400    :    9,052    :   11,635    :    9,078
==========================================================================

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.

Jeremy Knutson
1-877-212-2564
jknutson@hurleyandassociates.com

CORN
I said yesterday that I thought we would make a test of $3.40 in the March '09 contract and we had no problems with that today.  March '09 corn made a low of $3.33 1/4 today and didn't spend a lot of time above $3.40.  I would say we need to close the market back above $3.40 by tomorrow's close otherwise we could see some support at $3.25 but ultimately $2.90 in the March '09 contract.

 I also said yesterday that we had/have a buy signal at $3.45 1/2 stop.  This signal is still in play for tonight and tomorrow however, I don't know as though we can get it done.  It would be a friendly opening tonight if we gap below $3.33 1/4 and then move higher from there which is a possibility but I still don't think we will muster up enough momentum to carry us through $3.45 1/2 tonight or tomorrow.  If it doesn't get through $3.45 1/2 tonight or tomorrow then the signal is gone.  

Bottom line - I expect March '09 corn to open lower tonight and trade lower early on and then try to firm some going into tomorrow morning.  I think we could see some short covering tomorrow going into the weekend.  $3.25 is our next support level and below that is $2.90 so the market needs to close above $3.40 tomorrow in my opinion to keep from drifting further.  

MEAL
Jan '09 meal held in there today only closing lower by $1.20 at $245.50.  We still haven't touched the $238.80 number I have talked about this week but I am still not ruling out a test of that level.  Crude Oil was down $3.07 today and made new lows again at $43.36 which is$103.91 off of the high in July of this year!  It makes one wonder how muc h lower the Crude Oil market can go.  I have support around $40.13 which I mentioned a couple of weeks ago and it looks like a likely target at this point.  The next level of support below $40.13 is $33.80 or so.

Bottom line - I expect Jan '09 meal to be relatively strong tomorrow based on the trade activity we had today and the activity on the daily chart the last two days.  I thought we were going to make a test of $238.80 but I don't think tomorrow is that day, I think tomorrow will be firm.

HOGS
Feb '09 hogs closed at $63.65 which caught me off guard today, I expected them to firm based on last night's cutout value and the margins packers have.  The U.S. Dollar Index was all over the place today but for the most part it was .40 - .80 lower.  It looks like $63.00 is the next level in Feb '09 hogs and if we don't close above $63.75 (I prefer $64.32) tomorrow then I think we could make a run for $60.50.

I am not bearish hogs but I need to be objective in what I see in the chart because it is what I use for price direction. I still believe longer-term we can reach the low 70's within the next couple of months.  Cutout took back some of its gains from yesterday by dropping $.72 for the day.

Bottom line - I think we could test $63.00 tomorrow and I think it will hold and possibly bounce off of that area.  It feels like we should have some short-covering going into the weekend tomorrow and again I would like to see a close above $63.75.

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
-----------------------------------------------------------------------
12/04        47.5      60.24   72.12   67.65  32.50  86.75 57.51  71.53
Change :               -0.72   -0.61   -0.20  -0.45  -0.16 -0.11  -3.17
-----------------------------------------------------------------------

National Direct Hog Price Comparison

--------------------------------------------------------------------------
                :  National   :    Iowa     :   Western   :   Eastern
                :             :  Minnesota  :  Cornbelt   :  Cornbelt
--------------------------------------------------------------------------
   Base Price is the price from which no discounts are subtracted and
   no premiums are added.
--------------------------------------------------------------------------
BARROWS & GILTS :   .14 hgr   :   .03 lwr   :   .20 lwr   :   .70 hgr
Negotiated      :             :             :             :
CARCASS BASIS   : 45.00-57.00 : 45.00-56.00 : 45.00-56.00 : 51.00-57.00
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    54.14    :    53.85    :    53.80    :    54.68
--------------------------------------------------------------------------
Head Count      :   25,391    :   11,290    :   15,700    :    9,291
==========================================================================

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.

Jeremy Knutson
1-877-212-2564
jknutson@hurleyandassociates.com

CORN
I said yesterday I had a buy signal at $3.45 in the March '09 corn only if the market traded below $3.45 and then came back above it.  The signal is still good but we didn't get below $3.45 today because it was our low for today too.  This signal is on a daily chart and the only reason I am talking about it is because the market has good support around $3.40.

I would expect the market to test the $3.40 level at some point being we are so close to it.  We also have low volume to deal with because of the holiday's which makes for more volatile trade and can exaggerate moves in the markets.  Crude Oil was basically sideways today trading both sides of unchanged on the day.  The Dow Jones did the same thing, opened lower and then mounted a comeback to trade higher.

Bottom line - I am expecting a test of the $3.40ish area tonight/tomorrow and this will be influenced by the Dow Jones and Crude Oil.  I will still respect my buy signal at $3.45 1/2 stop if the market makes a low below $3.45.  If the order is filled an exit sell stop would be placed $.01 below the session low.  I am looking for sideways to lower trade tonight and tomorrow with the market looking for some direction from outside markets.

MEAL
As I said yesterday I think we can see the Jan '09 meal contract test the $238.80 level at some point in the near future.  I also said I thought we would take out yesterday's low before having a better day and we did just that.  The Jan '09 contract retraced 50% of today's range back to the $246.60 level and settled at $246.70.  If the market continues to maintain the $246.60 level then we could test today's high of $249.90 but if we fail then we are on to challenging our recent low of $243.20 and maybe even $238.80.

Bottom line - I expect meal to open better tonight in line with the strength from the Dow Jones going into its close.  I look for support at $246.60 but I think we can make another run at $243.20 either tonight or tomorrow at some point.  Don't get me wrong, I am not bearish at these levels but I think with the lack of volume we could see the market make some moves that it normally wouldn't in better volume trade.

HOGS
I got the number I have been looking for in the Feb '09 hogs, $64.32.  The market made a low at $64.05 in the pit and $64.12 in the Globex trade and closed at $64.37 which is above my number.  I would like to see the market close above this number tomorrow as well and begin a rally back to our most recent high of $67.05.  I feel as if we could see a rebound in the Feb '09 hogs tomorrow based on the setback we had today.  

The cutout number just showed up after I wrote the last paragraph and it solidifies my thought of the market being higher tomorrow because the cutout was up $1.32.  The Dec '08 and Feb '09 instantly rallied a few cents when the USDA released the number.  Cash was modestly lower today so packer margin had a nice gain today!

Bottom line - I said yesterday that I thought the market would test $64.32 before making another move higher and we have touched the $64.32 number and with the cutout number we had today I would expect this to be the beginning of a rally toward our most recent high of $67.05 in the Feb '09 contract.   I don't think we have enough momentum to do this tomorrow but I think it should happen over the next few days.

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
-----------------------------------------------------------------------
12/03        70.0      60.96   72.74   67.84  32.95  86.91 57.62  74.70
Change :                1.32    1.22   -1.09   0.28   0.10  4.45   0.01
-----------------------------------------------------------------------

National Direct Hog Price Comparison

--------------------------------------------------------------------------
                :  National   :    Iowa     :   Western   :   Eastern
                :             :  Minnesota  :  Cornbelt   :  Cornbelt
--------------------------------------------------------------------------
   Base Price is the price from which no discounts are subtracted and
   no premiums are added.
--------------------------------------------------------------------------
BARROWS & GILTS :   .49 lwr   :   .83 lwr   :   .87 lwr   :   .10 hgr
Negotiated      :             :             :             :
CARCASS BASIS   : 46.00-58.00 : 46.00-58.00 : 46.00-58.00 : 50.00-55.41
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    53.95    :    53.82    :    53.93    :    53.99
--------------------------------------------------------------------------
Head Count      :   25,088    :   13,108    :   15,735    :    9,153
==========================================================================

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.

Jeremy Knutson
1-877-212-2564
jknutson@hurleyandassociates.com

CORN
I mentioned in yesterday's post that I thought we would move lower and test yesterday's low of $3.45 which we did and held.  I also said I thought we could test $3.51 to $3.52 which was also achieved early in today's session.  Our low today was $3.45 and our high was $3.54 in the March '09 contract and again we closed above the $3.48 number I spoke of yesterday.  

I also said yesterday that we should have good support at $3.40 and if we can't hold $3.40 we could test $2.90 in the March '09 contract.  According to the CFTC the index funds actually increased their net long position by approximately 8900 contracts but the commodity funds (shorter-term traders compared to index funds) decreased their net long position by approximately 13,900 contracts.  

Bottom line - I am going to continue with my thoughts from yesterday of having better trade tomorrow.  The Dow Jones closed 270 points higher today while Crude Oil was down nearly $2.00.  I believe we will open slightly better tonight and have relatively quiet trade tonight.  I have a buy signal tonight/tomorrow IF the market trades below $3.45 and if it does and comes right back there would be a buy at $3.45 1/2 on a buy stop order.  The protective exit stop should be placed $.01 below the most recent low.  I think the market is poised to test $3.60 1/2 in the March '09 sometime in the near future.

MEAL
As I said yesterday, if we get a close below $250.20 then we could test $238.80 sometime in the near future.  I believe this is our next target in the Jan '09 meal contract in the coming days.  The low of $248.50 held early this morning but failed to maintain a solid support level as the session went on.  Crude Oil made new lows today and added pressure to the soybean and meal market.

Bottom line - I think we can test $238.80 sometime in the near future to see if it will hold support.  I don't think we have a ton of downside risk below this level at this time but I do think we can test it.  I am looking for tomorrow to be a better day although I think we could trade below today's low of $244.30 first and then rebound some but I am not looking for a runaway day to the upside either.   

HOGS
I don't have much to add to the hog picture today other than I still think $64.32 is a good area of support in the Feb '09 contract and I still believe we could see $72.95 at some point prior to Feb '09 expiration.  The cutout seems to be firming some and is giving the market some room to hope.  I am not a bear at these levels but I am cautious here because nobody knows what will happen.  You can never get married to an opinion of the market because it is a good way to get hurt.  

Bottom line - the cash and cutout were better again today but I still think we could make a test of $64.32 before making another run higher in the Feb '09 contract.  I think we will have early lows tonight and then firm tomorrow as the day progresses.

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
-----------------------------------------------------------------------
12/02       121.0      59.64   71.52   68.93  32.67  86.81 53.17  74.69
Change :                0.21   -0.56    0.73  -3.10   0.39  2.29    unc
-----------------------------------------------------------------------

National Direct Hog Price Comparison

--------------------------------------------------------------------------
                :  National   :    Iowa     :   Western   :   Eastern
                :             :  Minnesota  :  Cornbelt   :  Cornbelt
--------------------------------------------------------------------------
   Base Price is the price from which no discounts are subtracted and
   no premiums are added.
--------------------------------------------------------------------------
BARROWS & GILTS :   .26 hgr   :   .18 lwr   :   .02 lwr   :   .99 hgr
Negotiated      :             :             :             :
CARCASS BASIS   : 43.25-56.76 : 47.00-56.76 : 47.00-56.76 : 43.25-55.41
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    54.43    :    54.63    :    54.79    :    53.98
--------------------------------------------------------------------------
Head Count      :   25,061    :   10,791    :   13,659    :   11,077
==========================================================================

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.

Jeremy Knutson
1-877-212-2564
jknutson@hurleyandassociates.com

Good afternoon, what a wonderful Monday back to work after a long weekend of over-eating.  My beloved Minnesota Vikings beat the Chicago Bears last night and are now in first place alone atop the NFC North!

CORN
It wasn't long before the March '09 corn futures headed south for the day.  The market was down around $.06 overnight and the day session had the same type of feel going into the open only the day session opened around $.09 lower and ultimately closed $.17 lower on the day.

The Dow Jones was down around 400 points when the corn market closed this afternoon and then going into the 3:00 p.m. CST time-frame the Dow fell near its low of the day closing down around 680 points, ouch.  Crude Oil had a tough day in the market as well closing down over $5.00 a barrel.  March '09 corn has support at $3.40 which was the March futures low in 2007 and also the March futures high in 2004.  If $3.40 is breached on a consistent level we could see a test of near $2.90 in the March '09 futures.  This isn't a projection as much as an observation.  

I don't know about you but I do not want to be down at these levels and not have feed corn covered for an extended period of time via options.  I haven't seen hard signs of a bottom but it will find its bottom someday and you need to be prepared.  It is easy to look the other way when markets are moving in your direction but now is the time to get your plan together.  I have been long call options all the way down and have been rolling them down to make sure my coverage is in place when the market turns. 

Bottom line - It looks like we should have lower opening tonight based on what the Dow Jones did going into the close.  I expect a lower opening tonight and some follow through to the downside to test our low of $3.45 and maybe even $3.40.  I don't think we will stay lower all night long nor do I think we will have a major down move tomorrow.  The market traded below $3.48 3/4 during each of the four hourly session the market was open today and closed each one of them above this level.  I expect a test of today's lows but I think we will recover some tomorrow with a test of $3.51 to $3.52 1/2.

MEAL
I don't have much to say about Jan '09 meal other than I think we will test today's low of $248.50 and bounce.  $250.20 is our old low from Nov 21st, 2008 and held as support today.  If we close below $250.20 then we could test $238.80 at some point in the near future.  Crude Oil didn't have as much of an effect on Jan '09 meal today as I thought it would.  

Bottom line - I expect a lower opening tonight similar to corn and then find an early low and rally later in the session.  I think we should have early lows tomorrow and begin to firm as the day session progresses.  

HOGS
Feb '09 hogs closed $1.67 lower today off of little news.  It is probable that we could see a correction in the Feb '09 hogs back to the $64.32 area and then find support.  I don't think we will be able to do that tomorrow because the cutout was up $.95 today and cash was also marginally higher per the USDA.  As each day passes in the hog market I become more and more friendly, I am still hedged in the Dec '08 contract on a fraction of my hedges because we exited a majority of them for now to protect equity.  If the market makes a test of $64.32 and closes below it for two days then I will look to re-hedge but until then I will remain on the sidelines.  

The longer-term view of the charts show the market making a longer-term test of $72.95 in the Feb '09 contract and I am of the opinion that it could very well happen.  I do not want to be short a large amount of hogs at this time and am monitoring the U.S. Dollar Index to see if it can make up its mind.  The Dollar sold off rather hard during the first part of last week but recovered going into Friday.  I am still a longer-term bear on the U.S. Dollar based on all of the money that is being infused into Wall Street.

Bottom line - I expect tomorrow to be a better day in the hog market mainly due to the higher cutout price today.  I think we will experience our weakest market price early in the day and firm as the day session progresses.

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
-----------------------------------------------------------------------
12/01        48.9      59.43   72.08   68.20  35.77  86.42 50.88  74.69
Change :                0.95   -0.77    0.13  -2.02   0.97  4.74   1.19
-----------------------------------------------------------------------

National Direct Hog Price Comparison

--------------------------------------------------------------------------
                :  National   :    Iowa     :   Western   :   Eastern
                :             :  Minnesota  :  Cornbelt   :  Cornbelt
--------------------------------------------------------------------------
   Base Price is the price from which no discounts are subtracted and
   no premiums are added.
--------------------------------------------------------------------------
BARROWS & GILTS :   .72 hgr   :   .63 hgr   :   .76 hgr   :  1.70 hgr
Negotiated      :             :             :             :
CARCASS BASIS   : 46.00-59.00 : 46.00-59.00 : 46.00-59.00 : 46.00-55.41
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    54.06    :    54.74    :    54.80    :    52.99
--------------------------------------------------------------------------
Head Count      :   24,555    :   10,728    :   14,511    :    9,783
==========================================================================

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.