Hog & Corn Comments – 07/30/09 Pork cutout down $.45 again along with cash.

Notice our NEW section "Daily Prices & Fundamentals" that lists the most active hog options for the day, futures prices, daily cash and cutout prices as well as hog slaughter, all in one place.  This information is updated on our site daily around 9:00 pm CST; click here to view the information.

CORN – Sep '09 Electronic
Open – $3.21, High – $3.36 1/4, Low – $3.20 3/4, Close – $3.32 1/4 Up $.11 1/2
Thoughts – Long Term (into September '09) – Sideways/Higher

Monday I said: "Corn was the trade favorite today along with wheat as soybeans looked like the red-headed stepson (no disrespect to red-headed stepsons out there!) of the bunch by trading lower on the day.  The corn market gave back some of the gains from Thursday at the end of last week but the weekly chart with potential bottoming pattern.  The last two weeks of trade in the Sept '09 corn have provided warning signs that a potential reversal could happen; we still haven't seen that reversal as we need to close this week above $3.28 1/4.

The weekly crop ratings are out tonight and should provide the market with some further direction tonight and into tomorrow.  $3.23 1/4 is a 50% retracement level back to the $3.42 1/4 high we had two weeks ago and could provide some further resistance as it did today.  As I mentioned last week the USDA is going to "update" the acres in seven U.S. states due to "variable weather conditions" and all of this will take place in the Aug 12th report.  If the USDA would lower acres (which is the logical guess) then I would also expect an increase in yield to somewhat offset any changes.  Weather is still key to any kind of major rally in this market unless the USDA decides to stun us once again as they have begun to bring the integrity of their reporting into question, at least in my mind.”

Sep '09 corn: Broke out of our short-term downtrend based off the $3.42 1/4 high we had on July 15th.  Volume wasn't exceptional today but non-the-less the market still moved higher.  It seemed all of the stars were lined today as the Dow Jones was trading nearly 200 points higher, crude oil was up over $3.00 and the dollar was lower plus we had a good export report this morning.  Funds purchased around 6,000 contracts today which added fuel to the already burning fire and allowed the corn market to firm towards the close of the trade session.

The breakout of the mostly sideways trade range we've had since July 17th now gives us a sense of support around $3.28 which was the top end of the range.  We had a relatively strong close today which suggests a neutral to lower opening tonight but would also be a good opening for follow through to the upside tomorrow.  We still own price coverage in the Dec '09 contract at $3.50 via call options and have upside to $3.90 for the time being.

Bottom line: I am looking for the market to experience an early high tomorrow.

Sept '09 Corn – Support/Resistance for 07-31-09
(R3) Resistance 3: $3.42 1/2
(R2) Resistance 2: $3.36 1/4
(R1) Resistance 1: $3.33 1/4
Today’s close: $3.32 1/4
(S1) Support 1: $3.30 1/4
(S2) Support 2: $3.26
(S3) Support 3: $3.20 3/4
_________________________________________________________________________

MEAL – Sep '09 Electronic
Open – $306.40, High – $325.70, Low – $306.40, Close – $325.30 Up $18.80
Thoughts – Long Term (into September '09) – Sideways/Higher

Monday I said: "As you may have noticed I have started talking about the Sep '09 meal contract instead of the Aug '09 which will run into first notice day on Friday the 31st.  The Sep '09 contract needs to hold support at $294.90 if it has any chance of re-testing the $304.70 high posted last Thursday.  The daily chart shows us in an upward movement into next week before it settles down again and maybe drifts lower.

We still have protection in place in Sep '09 meal via call options.  We will maintain a long option position for the time being, we were able to buy back our short $360 call for $1.50 today to give us unlimited upside potential in this position.  We are still short $290 puts and long $320 calls for the time being.  We will look to exit the $290 puts on the next bounce if there is an opportunity.  Longer-term weekly charts are still holding support at $291.70 and if this continues to be the case we should rebound and test the $328.70 area at some point in the future.”

Sep '09 meal: Meal had a tremendous day technically and closed right at old resistance of $325.30 with the next objective of $328.00 which would be 50% of the way back to the $371.00 high we had in early June.  In the last couple of days we were able to exit our short $360.00 Sep '09 call options for $1.50 to lock in the equity we gained through selling them against our long $320 Sep '09 calls.  This gives us unlimited upside in this position and we will now look to exit our short $290 Sep '09 put to elimitate our downside risk as well.

The meal chart looks very good at  this point because in the last couple of weeks we've held the $291.70 support level which would suggest a test of $328 which could likely come either tonight or tomorrow.  The 8-14 day weather forecast has some heat moving into most of the major growing areas but there isn't a lack of rain in this forecast so the trade will monitor this closely.  If the market remains in a friendly mode after today it could become a story that gets talked about to fuel direction.

Some type of upside protection is almost a must considering the current situation with the hog industry while also trying to leave downside open because meal is still high priced from a historic perspective.  If you have questions about how to do this email me at leanhog@hurleyandassociates.com with your question and I will do my best to respond as soon as I can.

Bottom line: I’m looking for the market to experience an early high and a late low tomorrow.

Sep '09 Meal – Support/Resistance for 07-31-09
(R3) Resistance 3: $338.10
(R2) Resistance 2: $334.20
(R1) Resistance 1: $328.00
Today’s close: $325.30
(S1) Support 1: $320.10
(S2) Support 2: $318.80
(S3) Support 3: $313.90

_________________________________________________________________________

HOGS – Aug '09 GLOBEX
Open – $56.15, High – $56.475, Low – $54.375, Close – $54.625 Down $2.125
Thoughts – Long Term (into December) – Negative

Monday I said:  "Aug '09 hogs rallied during the latter portion of the trade session today but never really posted any major volume in doing so.  My first thought is someone knows something somewhere along.  By having this rally late in the day the charts look somewhat encouraging for tomorrow from a daily perspective.  I would expect some buying above today's high of $59.625 with buy stops around $59.90 or so.  My cycle indicator still points lower next week and I will stay on course with that but it doesn't mean we can't have a bounce somewhere along the line.

We still need the cutout AND the cash to move higher before futures can make a significant move higher.  The packers do have some margin at their disposal but they have been reluctant to use much of it thus far.  I will maintain a negative attitude for the time being until we can get the cash side of the business rolling and when there has been enough liquidation in the industry to sustain price rallies."

Aug '09 hogs:  Aug '09 hogs didn't take any breaks from the downside today as it fell another $2.125 today with not much hope for any upside at this point considering the cash was lower again this afternoon as well as the cutout being down $.45.  The market has moved slightly higher since the cutout number was released this afternoon on the notion that it wasn't as bad as it could have been.  The cash market needs to turn and turn fast for the August contract to have any hope of upside and thus far it doesn't look good. 

We are short in the Aug '09 contract and are looking for an opportunity to roll these positions out to the October '09 contract when the time is right.  The reason we are staying short in the near-term contracts are because of the weakness in the cash market.  If the market moves low enough and feed grains continue to climb we could eventually see the sow liquidation that the industry so desperately needs and that would further pressure the nearby contracts and give support to the deferred contracts. 

If you look at where the hog contracts settled on July 17th vs. where they settled today you will notice the front months have declined much further than the deferred.  From July 17th to the market close this afternoon the Aug contract has dropped (cwt) $10.05, Oct $7.95, Dec $5.975, Feb $5.845, Apr $5.375, Jun $3.97 and July $3.95.  You can see where the hedge opportunity has been in the last couple of weeks. 

Going back to 1989 I looked at the seasonal price tendencies for the first half of August using the Aug and Oct contract and here are my findings:

August Contract

October Contract

The results say be careful if you stay short the August contract beyond August 1st but I just don't know that history applies as much this year.  The risk to the downside clearly shows that the October contract is the best contract to be in for the first half of August in the event the market moves lower.

Bottom line: I’m looking for the market to make an early low tomorrow and firm as the day progresses.

Aug '09 Hogs – Support/Resistance for 07-31-09
(R3) Resistance 3: $56.475
(R2) Resistance 2: $55.675
(R1) Resistance 1: $55.425
Today’s close: $54.625
(S1) Support 1: $54.375
(S2) Support 2: New lows
(S3) Support 3: New lows

Click here to view cash and cutout reports

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.

Hog & Corn Comments – 07/27/09 Pork cutout $.85 lower today.

Notice our NEW section "Daily Prices & Fundamentals" that lists the most active hog options for the day, futures prices, daily cash and cutout prices as well as hog slaughter, all in one place.  This information is updated on our site daily around 9:00 pm CST; click here to view the information.

CORN – Sep '09 Electronic
Open – $3.17, High – $3.23, Low – $3.11 1/4, Close – $3.22 1/4 Up $.06
Thoughts – Long Term (into September '09) – Sideways/Higher

Last Wednesday I said: "In response to variable weather conditions in key crop-growing regions, the National Agricultural Statistics Service (NASS) is collecting updated information on 2009 acres planted to corn and sorghum prior to the August 12 Crop Production report.

The June 30 Acreage report included estimates of 2009 planted area for principal crops, based on data collected from producers in early June. To ensure that the August forecasts accurately reflect any changes in planted acreage since June, NASS will expand its routine data collection activities in late July and early August. The agency will ask growers to update their reported acres planted to corn in seven states: Illinois, Indiana, Kentucky, Missouri, North Dakota, Ohio and Pennsylvania. Growers in Illinois and Missouri will also be asked to update their reported acres planted to sorghum. ”

Face value this suggests a reduction in acres on the Aug 12th report but may also increase yield.  The states in question are mostly those that were wet this spring.  It has been reported that North Dakota alone has 1.2 million acres of prevented plant corn that wasn’t factored into the June 30th report.  Loss of these acres in North Dakota is much different than if they were lost in Iowa or Illinois but they are still acres gone assuming the report is accurate.

I would strongly suggest owning call options through the Aug 12th report.  This may be a non-event but the market had a major drop from its high and warrants some respect at these levels and knowing this information.”

Sep '09 corn: Corn was the trade favorite today along with wheat as soybeans looked like the red-headed stepson (no disrespect to red-headed stepsons out there!) of the bunch by trading lower on the day.  The corn market gave back some of the gains from Thursday at the end of last week but the weekly chart with potential bottoming pattern.  The last two weeks of trade in the Sept '09 corn have provided warning signs that a potential reversal could happen; we still haven't seen that reversal as we need to close this week above $3.28 1/4.

The weekly crop ratings are out tonight and should provide the market with some further direction tonight and into tomorrow.  $3.23 1/4 is a 50% retracement level back to the $3.42 1/4 high we had two weeks ago and could provide some further resistance as it did today.  As I mentioned last week the USDA is going to "update" the acres in seven U.S. states due to "variable weather conditions" and all of this will take place in the Aug 12th report.  If the USDA would lower acres (which is the logical guess) then I would also expect an increase in yield to somewhat offset any changes.  Weather is still key to any kind of major rally in this market unless the USDA decides to stun us once again as they have begun to bring the integrity of their reporting into question, at least in my mind.

Bottom line: I am looking for the market to experience an early low tomorrow.

Sept '09 Corn – Support/Resistance for 07-28-09
(R3) Resistance 3: $3.31 1/2
(R2) Resistance 2: $3.28 1/4
(R1) Resistance 1: $3.23 1/4
Today’s close: $3.22 1/4
(S1) Support 1: $3.20 1/4
(S2) Support 2: $3.18 1/4
(S3) Support 3: $3.13 1/4
_________________________________________________________________________

MEAL – Sep '09 Electronic
Open – $299.10, High – $301.10, Low – $296.20, Close – $296.60 Down $3.10
Thoughts – Long Term (into September '09) – Sideways/Higher

Last Tuesday I said: "Aug meal happened to be the strongest link in the market today only closing $2.10 lower on the day.  Meal is still at the bottom of what is a cycle low on my daily chart and is projected sideways to higher into the beginning of August.  The Aug '09 contract really did nothing of consequence today and had a relatively benign trade day.  The close suggests we should open steady to better tonight but I believe we will find resistance early in the $323.90 area.

Meal looks friendlier than corn does right now and I want to maintain call ownership to take advantage of the decline we've had in the market.  Like corn we will need to see a change in weather or some other outside source of information that will change the way the market is viewed.”

Sep '09 meal: As you may have noticed I have started talking about the Sep '09 meal contract instead of the Aug '09 which will run into first notice day on Friday the 31st.  The Sep '09 contract needs to hold support at $294.90 if it has any chance of re-testing the $304.70 high posted last Thursday.  The daily chart shows us in an upward movement into next week before it settles down again and maybe drifts lower.

We still have protection in place in Sep '09 meal via call options.  We will maintain a long option position for the time being, we were able to buy back our short $360 call for $1.50 today to give us unlimited upside potential in this position.  We are still short $290 puts and long $320 calls for the time being.  We will look to exit the $290 puts on the next bounce if there is an opportunity.  Longer-term weekly charts are still holding support at $291.70 and if this continues to be the case we should rebound and test the $328.70 area at some point in the future.

Bottom line: I’m looking for the market to experience an early low and a late high tomorrow.

Sep '09 Meal – Support/Resistance for 07-28-09
(R3) Resistance 3: $304.50
(R2) Resistance 2: $301.30
(R1) Resistance 1: $298.30
Today’s close: $296.60
(S1) Support 1: $294.90
(S2) Support 2: $292.50
(S3) Support 3: $290.00

_________________________________________________________________________

HOGS – Aug '09 GLOBEX
Open – $59.25, High – $59.625, Low – $57.825, Close – $59.175 Up $.125
Thoughts – Long Term (into December) – Negative

Last Wednesday I said: "Took $2.15 off the market today due to sell stops as well as a weak cash market.  The cash did finally close over a dollar higher on the day and cutout was up $1.24 but I believe the higher cutout was figured into today's trade.  I am of the opinion that August '09 still has some room to move to the downside unless we can get the cash market to keep bidding up for hogs like the USDA reported it did today.

Packers have a positive margin and they need to begin using it on a consistent basis as well as keeping the cutout market higher before I get too excited about the upside in the Aug '09 contract.  The market has rallied some since the afternoon cash and cutout reports have come out but there are willing sellers above the market to absorb the buying.  I am looking for hogs to take a breather tomorrow after today's big decline but I think it will be met with selling unless the cash market shows extended strength."

Aug '09 hogs: Aug '09 hogs rallied during the latter portion of the trade session today but never really posted any major volume in doing so.  My first thought is someone knows something somewhere along.  By having this rally late in the day the charts look somewhat encouraging for tomorrow from a daily perspective.  I would expect some buying above today's high of $59.625 with buy stops around $59.90 or so.  My cycle indicator still points lower next week and I will stay on course with that but it doesn't mean we can't have a bounce somewhere along the line.

We still need the cutout AND the cash to move higher before futures can make a significant move higher.  The packers do have some margin at their disposal but they have been reluctant to use much of it thus far.  I will maintain a negative attitude for the time being until we can get the cash side of the business rolling and when there has been enough liquidation in the industry to sustain price rallies.

Bottom line: I’m looking for the market to make an early low tomorrow and firm as the day progresses.

Aug '09 Hogs – Support/Resistance for 07-28-09
(R3) Resistance 3: $61.375
(R2) Resistance 2: $60.55
(R1) Resistance 1: $59.65
Today’s close: $59.175
(S1) Support 1: $58.725
(S2) Support 2: $57.825
(S3) Support 3: $57.22

Click here to view cash and cutout reports

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.

Hog & Corn Comments 07/21/09 – Hog cutout up $1.24 on the heels of sell off.

Notice our NEW section "Daily Prices & Fundamentals" that lists the most active hog options for the day, futures prices, daily cash and cutout prices as well as hog slaughter, all in one place.  This information is updated on our site daily around 9:00 pm CST; click here to view the information.

CORN – Sep '09 Electronic
Open – $3.23, High – $3.24 1/2, Low – $3.10 1/4, Close – $3.11 1/2 Down $.11 3/4
Thoughts – Long Term (into September '09) – Sideways/Higher

Yesterday I said: "There is no fundamental reason to buy corn at these levels but the market has dropped from $4.60 on it high to Friday's low of $3.16 which makes me wonder how much is left to the downside at this point.  There isn't any special signals in the corn chart right now other than we have completed (assuming Friday's low holds) the 5th wave in the Elliot Wave technical indicator, the market is oversold (from June 15th) and I have a cycle low as of tomorrow in the September 2009 contract.

The weekly chart has also shown some signs of the sell off slowing down and possibly looking for a rebound to the upside.  The market has dropped too much to ignore protection of these levels via a known risk strategy.  Fundamentally we could move lower but we have learned over the last couple of years that the markets don't always trade fundamentally.  Risk management would suggest a move to protect this lower priced corn as we have done through a Dec '09 three way option strategy which at this point gives us limited upside and downside.  We own a $3.50 Dec '09 call, sold a Dec '09 $3.90 call and sold a Dec '09 $3.20 put.

Based on this position we are near the point of flat ownership of corn at $3.20 basis the Dec '09 contract but if this is the case we will look to sell futures against those short puts to neutralize our position until we feel more comfortable about the prospect of a sizable futures rally.  At this point we will look to exit the short options in our position when given an opportunity to do so, we were unable to take off our short $3.90 call for a "reasonable" amount even with the recent decline in the market.  Time is our benefactor at this point so we look to give time a chance to work for us and our position.

The Sept '09 corn market will need a close $3.42 1/4 before I get extremely excited about the prospect of a sizable futures rally.  Weather has not major threats on the horizon and until it does (early freeze) the markets may trade sideways and range bound for now.”

Sep '09 corn:  First, I would like to apologize for yesterday's comments.  I was talking about Sept '09 corn in my comments but gave support and resistance on Dec '09 corn.  The comments were accurate but the support/resistance numbers were for Dec and again I apologize. 

Sep '09 corn had a rough day today closing .11 3/4 lower on the day and closing below the old contract low of $3.16 which was made last Friday.  If we have another close below $3.16 tomorrow then I will be looking for another leg down in corn.  I see on the charts a conditional buy signal at $3.16 1/2 for tomorrow, this buy signal is a stop so the signal is at $3.16 1/2 stop with a protective risk management sell stop at $.01 below the current low when the buy order is filled.

The corn market really has no fundamental reason to rally unless we get into the early freeze scenarios then we could put some premium back into the market but for now that hasn't happened.  I don't believe I would take the trade discussed above unless it proved to me to be a good signal after closing above $3.16 for a couple of days.  If this signal is good it should provide a sharp rally which I think will be hard to muster up given the current weather situation. 

We remain long via options and will continue to do so.  The Dec '09 corn market has dropped just over 32% off of the spring high which is the 3rd largest percentage drop from high to low since 1988.  The biggest drop of course was last year but it is almost unfair to include last year as a normal year; 2008 dropped 63.7% and 2004 dropped 44.1%.  Lower is the path of least resistance right now and it will take some type of change in weather (or talk of change in weather) to keep the market from moving lower through time.  I expect rallies in this market as we move forward but these rallies more than likely will be met with selling.

Bottom line: I am looking for the market to experience an early low tomorrow.

Sept '09 Corn – Support/Resistance for 07-22-09
(R3) Resistance 3: $3.21 1/2
(R2) Resistance 2: $3.17 1/4
(R1) Resistance 1: $3.15 3/4
Today’s close: $3.11 1/2
(S1) Support 1: $3.10 1/4
(S2) Support 2: New contract lows
(S3) Support 3: New contract lows
_________________________________________________________________________

MEAL – Aug '09 Electronic
Open – $327.30, High – $330.40, Low – $317.30, Close – $322.30 Down $2.10
Thoughts – Long Term (into September '09) – Sideways/Higher

Yesterday I said: "Has dropped considerably with corn over the last three weeks but looks like the Aug '09 contract is trying to find a bottom in this area.  As I mentioned in my last post we had a known risk strategy in place and thankfully so because the market dropped much below where our call option strike price.  We have since moved our position out to the Sept '09 contract by owning a $320 call, selling a $290 put and a $360 call.  Like corn we are nearing the short put strike price and if the market looks like it will continue to find weakness we will sell futures against our short put to neutralize the position.

The Aug '09 meal contract is at the 50% retracement level back to the contract low of $242.10 from December 2008.  The market closed slightly below the $319.80 support level last week but is currently trading above this level.  In my opinion the Aug '09 contract will have to close above $319.80 this week in order for it to make any type of rally attempt.  Like corn the meal market is due for a rebound off of the collapse we've had this month but the question is can the market sustain any type of major rally and at this point my thought is no.  Weather our outside forces will have to change to allow the market to sustain a major rally.”

Aug '09 meal:  Aug meal happened to be the strongest link in the market today only closing $2.10 lower on the day.  Meal is still at the bottom of what is a cycle low on my daily chart and is projected sideways to higher into the beginning of August.  The Aug '09 contract really did nothing of consequence today and had a relatively benign trade day.  The close suggests we should open steady to better tonight but I believe we will find resistance early in the $323.90 area.

Meal looks friendlier than corn does right now and I want to maintain call ownership to take advantage of the decline we've had in the market.  Like corn we will need to see a change in weather or some other outside source of information that will change the way the market is viewed.

Bottom line: I’m looking for the market to experience an early low and a late high tomorrow.

Aug '09 Meal – Support/Resistance for 07-22-09
(R3) Resistance 3: $330.40
(R2) Resistance 2: $325.40
(R1) Resistance 1: $323.90
Today’s close: $322.30
(S1) Support 1: $320.60
(S2) Support 2: $317.30
(S3) Support 3: $315.20

_________________________________________________________________________

HOGS – Aug '09 GLOBEX
Open – $64.65, High – $64.675, Low – $62.05, Close – $62.50 Down $2.15
Thoughts – Long Term (into August) – Friendly

Yesterday I said: "August hogs have rallied nicely since my last post as well as the cutout values.  Cash has been stubborn and remains so with packers cutting kills and refusing to bid higher money to move hogs.  The August '09 contract is now trading $6.04 premium to the CME cash index so this means something has to give, cash or futures.  At this point one would almost certainly think the futures are going to give because of the packer's behavior but they can change their mind on a moment's notice.

The Aug '09 contract has rallied to just above the 50% retracement mark of $64.40 and the next major resistance level is going to be the 62% retracement level of $66.10.  I have a cycle high projected for this Thursday and it has the Aug '09 projecting lower into the first week of August.  The cycle high is coming in conjunction with the market losing momentum to the upside as well as being over-bought which leads me to believe the August '09 contract is living on borrowed time unless cash finally makes a push higher."

Aug '09 hogs:  Took $2.15 off the market today due to sell stops as well as a weak cash market.  The cash did finally close over a dollar higher on the day and cutout was up $1.24 but I believe the higher cutout was figured into today's trade.  I am of the opinion that August '09 still has some room to move to the downside unless we can get the cash market to keep bidding up for hogs like the USDA reported it did today. 

Packers have a positive margin and they need to begin using it on a consistent basis as well as keeping the cutout market higher before I get too excited about the upside in the Aug '09 contract.  The market has rallied some since the afternoon cash and cutout reports have come out but there are willing sellers above the market to absorb the buying.  I am looking for hogs to take a breather tomorrow after today's big decline but I think it will be met with selling unless the cash market shows extended strength.

Bottom line: I’m looking for the market to make an early low tomorrow and firm as the day progresses.

Aug '09 Hogs – Support/Resistance for 07-22-09
(R3) Resistance 3: $64.40
(R2) Resistance 2: $63.675
(R1) Resistance 1: $63.35
Today’s close: $62.50
(S1) Support 1: $62.05
(S2) Support 2: $61.35
(S3) Support 3: $60.80

Click here to view cash and cutout reports

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.

Hog & Corn Comments – 07/20/09 Hogs find resistance as grains look for a bottom.

I will be posting today, Tuesday and Wednesday of this week.

Notice our NEW section "Daily Prices & Fundamentals" that lists the most active hog options for the day, futures prices, daily cash and cutout prices as well as hog slaughter, all in one place.  This information is updated on our site daily around 9:00 pm CST; click here to view the information.

CORN – Sep '09 Electronic
Open – $3.22, High – $3.25, Low – $3.18 1/4, Close – $3.23 1/4 Up $.01
Thoughts – Long Term (into September '09) – Bullish/Higher

Last post I said: "The market responded to the potential buy signal I spoke of yesterday, although I would have liked a stronger close than what we had today. I said the signal was at $3.55, so let's say that we are long futures at $3.55 for now and we will follow this trade as if we have it in place. This is the same signal that generated the buy in meal last week that we followed.

I didn't buy futures today to go long the market, but I did buy an August '09 $3.55 call and sold a Sept '09 call for $.07 1/2 to bridge the gap between where the market currently sits and my other call options, which are above the market. I also lifted some futures that I sold at $3.88 1/4 last Friday to neutralize my long options position in corn. We had over $.30 in this "delta hedge," so I lifted that position this morning to keep that equity and apply it against our long call positions that lost value when the market dropped yesterday. This was the sole purpose for the short futures.

I had a stop order below the market all day in case I was wrong to lift these short futures, but thus far it hasn't been hit. The crude oil market was down around $1.30 or so when the grain markets closed and has since rallied to be down only $.50, which should provide some support to this evening's trade in corn. At this point, the Sep '09 corn contract closed above $3.55, which was 50% of today's trade range, therefore giving me reason to believe we should make another run toward $3.61 tonight or tomorrow. If we manage to close above that level, we should see more buying enter the market.

Don't get me wrong, I don't think we are going to blow and go, I am just respecting the buy signal the charts have given us and will wait for it to tell me something different. The report yesterday was indeed bearish to corn, but now that one can argue it has been traded, we will go with the flow of the market and begin to look for something else to move the market, and that would be weather. I have seen more reports about a dry system moving through the corn belt in mid-July, although I haven't seen anything in the way of major heat. This will develop through the weekend, which should keep the downside of this market controlled going into the long holiday weekend.”

Sep '09 corn: There is no fundamental reason to buy corn at these levels but the market has dropped from $4.60 on it high to Friday's low of $3.16 which makes me wonder how much is left to the downside at this point.  There isn't any special signals in the corn chart right now other than we have completed (assuming Friday's low holds) the 5th wave in the Elliot Wave technical indicator, the market is oversold (from June 15th) and I have a cycle low as of tomorrow in the September 2009 contract.

The weekly chart has also shown some signs of the sell off slowing down and possibly looking for a rebound to the upside.  The market has dropped too much to ignore protection of these levels via a known risk strategy.  Fundamentally we could move lower but we have learned over the last couple of years that the markets don't always trade fundamentally.  Risk management would suggest a move to protect this lower priced corn as we have done through a Dec '09 three way option strategy which at this point gives us limited upside and downside.  We own a $3.50 Dec '09 call, sold a Dec '09 $3.90 call and sold a Dec '09 $3.20 put.

Based on this position we are near the point of flat ownership of corn at $3.20 basis the Dec '09 contract but if this is the case we will look to sell futures against those short puts to neutralize our position until we feel more comfortable about the prospect of a sizable futures rally.  At this point we will look to exit the short options in our position when given an opportunity to do so, we were unable to take off our short $3.90 call for a "reasonable" amount even with the recent decline in the market.  Time is our benefactor at this point so we look to give time a chance to work for us and our position.

The Sept '09 corn market will need a close $3.42 1/4 before I get extremely excited about the prospect of a sizable futures rally.  Weather has not major threats on the horizon and until it does (early freeze) the markets may trade sideways and range bound for now.

Bottom line: I am looking for the market to experience an early low tomorrow.

Sept '09 Corn – Support/Resistance for 07-21-09
(R3) Resistance 3: $3.29 1/4
(R2) Resistance 2: $3.25
(R1) Resistance 1: $3.24
Today’s close: $3.23 1/4
(S1) Support 1: $3.21
(S2) Support 2: $3.18 1/4
(S3) Support 3: $3.16
_________________________________________________________________________

MEAL – Aug '09 Electronic
Open – $318.80, High – $327.20, Low – $317.10, Close – $324.40 Up $6.90
Thoughts – Long Term (into September '09) – Bullish/Higher

Last post I said: "It didn't take long for the first close above $380.20 to come. As I mentioned yesterday, I wanted to see the Aug '09 meal close above $380.20 for two consecutive days before I got excited about getting long the meal market from a futures perspective. I will need to see the market hold the $380.20 support level for now and look for a signal to buy the market. We currently have call options on, so we will not purchase futures at this time but will follow the charts to see what they tell us.

As I mentioned yesterday, the weekly chart is poised for follow-through to the upside and it is holding true to form after today's run-up. I don't see anything at this time that suggests I should be completely on the sidelines in meal. We will continue to hold known risk strategies on meal until we see reason to do otherwise. I am looking to take back some gains early, but I think the market will be strong going into the long weekend, with talk of a possible dry forecast for mid-July.”

Aug '09 meal: Has dropped considerably with corn over the last three weeks but looks like the Aug '09 contract is trying to find a bottom in this area.  As I mentioned in my last post we had a known risk strategy in place and thankfully so because the market dropped much below where our call option strike price.  We have since moved our position out to the Sept '09 contract by owning a $320 call, selling a $290 put and a $360 call.  Like corn we are nearing the short put strike price and if the market looks like it will continue to find weakness we will sell futures against our short put to neutralize the position.

The Aug '09 meal contract is at the 50% retracement level back to the contract low of $242.10 from December 2008.  The market closed slightly below the $319.80 support level last week but is currently trading above this level.  In my opinion the Aug '09 contract will have to close above $319.80 this week in order for it to make any type of rally attempt.  Like corn the meal market is due for a rebound off of the collapse we've had this month but the question is can the market sustain any type of major rally and at this point my thought is no.  Weather our outside forces will have to change to allow the market to sustain a major rally.

Bottom line: I’m looking for the market to experience an early high and a late low tomorrow.

Aug '09 Meal – Support/Resistance for 07-21-09
(R3) Resistance 3: $334.20
(R2) Resistance 2: $329.50
(R1) Resistance 1: $327.30
Today’s close: $324.40
(S1) Support 1: $322.40
(S2) Support 2: $319.80
(S3) Support 3: $317.50

_________________________________________________________________________

HOGS – Aug '09 GLOBEX
Open – $64.775, High – $65.00, Low – $64.275, Close – $64.65 Down $.025
Thoughts – Long Term (into August) – Friendly

Last post I said: "I have to say I am impressed with the firmness of the hog market. I said yesterday that the open interest was on a decline and volume was moving higher, which means someone is exiting the market, although I don't know who. Index funds were thought to be buying today, which helped fuel the rally into the close of the day session, which is impressive considering the cutout was down $1.72 yesterday.

We did get word per Reuters today that Russia has removed some of its ban of U.S. pork products, but this news was published prior to the market open this morning, so I can't say the rally was a direct response to the Russian news. The Russians said they will now REMOVE the ban from the following states: Connecticut, Massachusetts and Michigan.  They will also take SOME pork products from Florida, Illinois, New Jersey, New York, Pennsylvania, Texas and Utah, but they WILL NOT import live hogs or uncooked pork products from these particular states.

I said yesterday we needed to close above $60.65 today in order to test the high of $62.15 from two weeks ago, and we got it. I believe this is the market's next target area to test before it finds strong resistance. The Russian news should help to some degree, but we still need China to come back to the table and for Russia to take all U.S. pork products again.

I have to mention what has been on my mind for the last couple of days. The index funds are long approximately 55,000 contracts of hogs (historical maximum was around 125,000 long positions at one time) and were net buyers of 2,400 contracts last week per the CFTC, and the commodity (regular) funds are short around 26,000 contracts, which is a record short for the commodity funds. I find it interesting that the index funds are building a long position; however, they are long-term position traders and the commodity funds are record short and were net sellers of around 1,000 contracts last week.

This is my food for thought question: If there is a fundamental reason for the market to rally (Russia and China lift import ban plus the dollar is much weaker than before the ban was placed), who are the commodity funds going to buy futures from? Who is going to be the willing seller so the funds can exit their short positions? It is almost like the index funds are going to end up cornering the market and make life difficult for the funds for a few days. I don't mean that it is planned, but it could end up that way. The bottom line is we could have a rip-your-face-off rally when the market has reason to do so.

I am more impressed with the market today than I was two days ago, but I am still skeptical. We need some good weekly closes before I get excited. Demand is still the key to turning this market around and Russia gave us a little hope today, but we have a long way to go. Assuming cutout is not down over a dollar tonight, I would expect the market to retreat early and look for support around $60.35 and then try to firm from there."

Aug '09 hogs: August hogs have rallied nicely since my last post as well as the cutout values.  Cash has been stubborn and remains so with packers cutting kills and refusing to bid higher money to move hogs.  The August '09 contract is now trading $6.04 premium to the CME cash index so this means something has to give, cash or futures.  At this point one would almost certainly think the futures are going to give because of the packer's behavior but they can change their mind on a moment's notice.

The Aug '09 contract has rallied to just above the 50% retracement mark of $64.40 and the next major resistance level is going to be the 62% retracement level of $66.10.  I have a cycle high projected for this Thursday and it has the Aug '09 projecting lower into the first week of August.  The cycle high is coming in conjunction with the market losing momentum to the upside as well as being over-bought which leads me to believe the August '09 contract is living on borrowed time unless cash finally makes a push higher.

Bottom line: I’m looking for the market to make an early high tomorrow and weaken as the day progresses.

Aug '09 Hogs – Support/Resistance for 07-21-09
(R3) Resistance 3: $66.10
(R2) Resistance 2: $65.55
(R1) Resistance 1: $65.00
Today’s close: $64.65
(S1) Support 1: $64.525
(S2) Support 2: $64.40
(S3) Support 3: $64.05

Click here to view cash and cutout reports

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.

Hog & Corn Comments – Russia removes SOME U.S. pork import bans.

Notice our NEW section "Daily Prices & Fundamentals" that lists the most active hog options for the day, futures prices, daily cash and cutout prices as well as hog slaughter, all in one place.  This information is updated on our site daily around 9:00 pm CST; click here to view the information.

CORN – Sep '09 Electronic
Open – $3.51 1/2, High – $3.61, Low – $3.49, Close – $3.56 1/2 Up $.02
Thoughts – Long Term (into September '09) – Bullish/Higher
 

Yesterday I said: "The USDA does it again, they found just over 2 million more corn acres than what the intentions report said at the end of March. This number was even bigger to the trade, which had the number pegged at 1 million less than the March report! Needless to say, the market made a move lower right off the open, then traded limit and stayed there for the balance of the day.

"There were a couple of times throughout the trade session where it looked like we were going to trade off of the limit lower number of down $.30, but there was just too much pressure. We blew through the $3.80 support level that I was looking for and went all the way through the next level at $3.63 1/4. The close we had tonight sets up a buy signal IF the market opens lower, and then it will trigger a buy stop signal at $3.55. If the stop is filled, a risk management sell stop should be placed $.01 below the most current low.

"I am interested in this signal because the market had already fallen significantly prior to the report, so I would say some of today's bearishness is already factored into the market. I don't believe this signal will provide a blow and go type reversal, but with the hog industry in the state that it is, I want to make sure I have good coverage for feed needs at lower levels in the market if it will allow us to do so.

"I am not a big fan of straight futures at this level because the report was bearish, but I am extremely interested in a known risk strategy to get coverage in place for feed. If you need feed coverage, now is a GREAT time to be looking into getting some coverage on. Talk with your broker about a strategy that is good for you and your operation.”

Sep '09 corn: The market responded to the potential buy signal I spoke of yesterday, although I would have liked a stronger close than what we had today. I said the signal was at $3.55, so let's say that we are long futures at $3.55 for now and we will follow this trade as if we have it in place. This is the same signal that generated the buy in meal last week that we followed.

I didn't buy futures today to go long the market, but I did buy an August '09 $3.55 call and sold a Sept '09 call for $.07 1/2 to bridge the gap between where the market currently sits and my other call options, which are above the market. I also lifted some futures that I sold at $3.88 1/4 last Friday to neutralize my long options position in corn. We had over $.30 in this "delta hedge," so I lifted that position this morning to keep that equity and apply it against our long call positions that lost value when the market dropped yesterday. This was the sole purpose for the short futures.

I had a stop order below the market all day in case I was wrong to lift these short futures, but thus far it hasn't been hit. The crude oil market was down around $1.30 or so when the grain markets closed and has since rallied to be down only $.50, which should provide some support to this evening's trade in corn. At this point, the Sep '09 corn contract closed above $3.55, which was 50% of today's trade range, therefore giving me reason to believe we should make another run toward $3.61 tonight or tomorrow. If we manage to close above that level, we should see more buying enter the market.

Don't get me wrong, I don't think we are going to blow and go, I am just respecting the buy signal the charts have given us and will wait for it to tell me something different. The report yesterday was indeed bearish to corn, but now that one can argue it has been traded, we will go with the flow of the market and begin to look for something else to move the market, and that would be weather. I have seen more reports about a dry system moving through the corn belt in mid-July, although I haven't seen anything in the way of major heat. This will develop through the weekend, which should keep the downside of this market controlled going into the long holiday weekend.

Bottom line: I am looking for the market to experience an early low tomorrow.

Sept '09 Corn – Support/Resistance for 07-02-09
(R3) Resistance 3: $3.62 3/4
(R2) Resistance 2: $3.61 1/4
(R1) Resistance 1: $3.57 3/4
Today’s close: $3.56 1/2
(S1) Support 1: $3.54 1/2
(S2) Support 2: $3.42 3/4
(S3) Support 3: $3.35 3/4
_________________________________________________________________________

MEAL – Aug '09 Electronic
Open – $375.90, High – $390.00, Low – $375.80, Close – $384.20 Up $9.90
Thoughts – Long Term (into September '09) – Bullish/Higher

Yesterday I said: "The trade that we have been following for the last few days would have finally been closed today as the market did touch the $367.00 area and move lower, so if we were in the trade (I wasn't because we own calls) we would have been stopped out today around $367.00 in the August contract. The trade was entered around $352 and exited around $367 for a nice gain and now I would like to see the August '09 close above $380.20 for two consecutive days before I would look to re-own it on a rally. This is not a recommendation; we are just following some signals, so please do what is right for your operation.

"The meal market was the strongest link in the grains today as the USDA projects 1.46 million more acres than the March intentions report, but they were about 600,000 less than what the trade was expecting; therefore it was a friendly report on soybeans. As I said before, I need to see the Aug '09 contract close above $380.20 before I get too excited about a test of the old high of $397.00. The weekly chart still looks poised to follow through to the upside from here.”

Aug '09 meal: It didn't take long for the first close above $380.20 to come. As I mentioned yesterday, I wanted to see the Aug '09 meal close above $380.20 for two consecutive days before I got excited about getting long the meal market from a futures perspective. I will need to see the market hold the $380.20 support level for now and look for a signal to buy the market. We currently have call options on, so we will not purchase futures at this time but will follow the charts to see what they tell us.

As I mentioned yesterday, the weekly chart is poised for follow-through to the upside and it is holding true to form after today's runup. I don't see anything at this time that suggests I should be completely on the sidelines in meal. We will continue to hold known risk strategies on meal until we see reason to do otherwise. I am looking to take back some gains early, but I think the market will be strong going into the long weekend, with talk of a possible dry forecast for mid-July.

Bottom line: I’m looking for the market to experience an early low and a late high tomorrow.

Aug '09 Meal – Support/Resistance for 07-02-09
(R3) Resistance 3: $393.50
(R2) Resistance 2: $390.00
(R1) Resistance 1: $387.20
Today’s close: $384.20
(S1) Support 1: $383.10
(S2) Support 2: $380.20
(S3) Support 3: $375.80

_________________________________________________________________________

HOGS – Aug '09 GLOBEX
Open – $59.60, High – $61.175, Low – $59.50, Close – $60.70 Up $.05
Thoughts – Long Term (into August) – Friendly

Yesterday I said: "The August '09 contract got a burst of buying today as end of month and end of quarter buying surfaced in the market. This was needed to some degree to allow the market some room to absorb another stellar day in the cutout market. Yes, you guessed it, down $1.72. The news was released to the public at about 3:13 p.m. CST and the market immediately dropped off but found some support around $59.80.

"The August contract had good volume today and has increased in recent days while the open interest has decreased, which suggests this is a short covering bounce for now. The Aug '09 contract closed at $60.65 today, which is above the $60.30 resistance area or the 62% retracement back to the $62.15 high from two weeks ago. This needs to happen again tomorrow if we have any shot at testing $62.15, otherwise we may look for another move toward the lows.

"My hourly cycle indicator has an early high for tomorrow with the market setting back some as the day progresses, and with this afternoon's cutout number being down as much as it was, it only stands to reason."

Aug '09 hogs: I have to say I am impressed with the firmness of the hog market. I said yesterday that the open interest was on a decline and volume was moving higher, which means someone is exiting the market, although I don't know who. Index funds were thought to be buying today, which helped fuel the rally into the close of the day session, which is impressive considering the cutout was down $1.72 yesterday. 

We did get word per Reuters today that Russia has removed some of its ban of U.S. pork products, but this news was published prior to the market open this morning, so I can't say the rally was a direct response to the Russian news. The Russians said they will now REMOVE the ban from the following states: Connecticut, Massachusetts and Michigan.  They will also take SOME pork products from Florida, Illinois, New Jersey, New York, Pennsylvania, Texas and Utah, but they WILL NOT import live hogs or uncooked pork products from these particular states.

I said yesterday we needed to close above $60.65 today in order to test the high of $62.15 from two weeks ago, and we got it. I believe this is the market's next target area to test before it finds strong resistance. The Russian news should help to some degree, but we still need China to come back to the table and for Russia to take all U.S. pork products again.

I have to mention what has been on my mind for the last couple of days. The index funds are long approximately 55,000 contracts of hogs (historical maximum was around 125,000 long positions at one time) and were net buyers of 2,400 contracts last week per the CFTC, and the commodity (regular) funds are short around 26,000 contracts, which is a record short for the commodity funds. I find it interesting that the index funds are building a long position; however, they are long-term position traders and the commodity funds are record short and were net sellers of around 1,000 contracts last week. 

This is my food for thought question: If there is a fundamental reason for the market to rally (Russia and China lift import ban plus the dollar is much weaker than before the ban was placed), who are the commodity funds going to buy futures from? Who is going to be the willing seller so the funds can exit their short positions? It is almost like the index funds are going to end up cornering the market and make life difficult for the funds for a few days. I don't mean that it is planned, but it could end up that way. The bottom line is we could have a rip-your-face-off rally when the market has reason to do so. 

I am more impressed with the market today than I was two days ago, but I am still skeptical. We need some good weekly closes before I get excited. Demand is still the key to turning this market around and Russia gave us a little hope today, but we have a long way to go. Assuming cutout is not down over a dollar tonight, I would expect the market to retreat early and look for support around $60.35 and then try to firm from there. 

Bottom line: I’m looking for the market to make an early high tomorrow and weaken as the day progresses.

Aug '09 Hogs – Support/Resistance for 07-02-09
(R3) Resistance 3: $62.15
(R2) Resistance 2: $61.35
(R1) Resistance 1: $61.175
Today’s close: $60.70
(S1) Support 1: $60.35
(S2) Support 2: $60.15
(S3) Support 3: $59.50

Click here to view cash and cutout reports

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.