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The Lean Hog Perspective

RSS By: Jeremy Knutson

This lean hog and feed commentary contains thoughts from Jeremy Knutson, a commodity broker with Hurley & Associates.

Hog & Corn Comments - 04/15/09 - Hogs inch... ahh, who am I kidding. IT'S TAX DAY!

Apr 15, 2009

Hog Comments - 04-15-09 - Hogs inch... ahh, who am I kidding. IT'S TAX DAY!


If you have questions, comments or suggestions, contact me at 1-877-212-2564 or email me at jknutson@hurleyandassociates.comTo read what I was thinking at the highs and lows of the market go to  www.leanhog.net to view my archived posts.

CORN - May ‘09 Electronic
Open - $3.94, High - $3.94 3/4, Low - $3.84, Close - $3.84 1/2 Down $.09 3/4.

Thoughts - Long Term (6 months) - Bullish/Higher

Yesterday I said: I am looking for the market to have follow through to the upside tomorrow and experience an early high and a late low.  I look for support to be $3.93 1/4, $3.92 and $3.87 3/4.  Resistance should show up at $3.95 1/4, $3.98 1/4 and $4.04.  I expect the May ‘09 corn contract to open higher tonight and follow through with early strength and then meet resistance early.

May ‘09 corn:  Early resistance was a common theme in corn today the session high was indeed made early in the day.  Today's trade in the May '09 contract was ugly to put it lightly and we closed below yesterday's low which isn't encouraging.  As I've said recently I am looking for an opportunity to purchase May '09 corn around $3.76 1/2 if I can.  $3.76 3/4 is our next downside target assuming we can break Monday's low of $3.83.  I will gain ownership at $3.76 1/2 if possible against the $2.80 put options we own.  I think this down turn in the market is a correction of what will be a longer-term higher move in the market based off of inflation fears.

Bottom line: I am looking for the market to have follow through to the downside tomorrow and experience an early low and a late high.  I don't look for a test of R3 tomorrow but I think the market will be looking for this week's bottom tomorrow. 


May '09 Corn - Support/Resistance for 04-16-09
(R3) Resistance 3: $3.92 3/4
(R2) Resistance 2: $3.91
(R1) Resistance 1: $3.88 1/4
Today's close: $3.84 1/2
(S1) Support 1: $3.83
(S2) Support 2: $3.79
(S3) Support 3: $3.76 3/4

_________________________________________________________________________


MEAL - May ‘09 Electronic
Open - $315.80, High - $321.80, Low - $314.50, Close - $317.30 Up $1.00
Thoughts - Long Term (6 months) - Bullish/Higher

Yesterday I said: I’m looking for the market to have follow through to the upside tonight/tomorrow and experience an early high and a late low.  I look for support to be $314.50, $313.50 and $312.10.  Resistance should show up at $316.90, $319.00 and $325.20.  I expect the May ‘09 meal contract to open higher tonight and follow through with early strength and then meet resistance early.  **IF get above $319.00 either tonight/tomorrow or Thursday and move back below this level then I have a sell signal at $318.50 on the daily chart.  If filled based on the sell signal then the protective buy stop order to manage risk would be $.50 above the current session high.**  This is an observation only and it provides confidence in what the charts have already been saying at these levels, be careful if your long.  As always please do what is right for your operation, take this information as insight not recommendation.

May ‘09 meal: The early high and late low pattern worked on May '09 meal today but I think we may have some additional downside tomorrow.  The signal that I talked about in the paragraph above was executed today and I did take the trade however I exited the straight futures portion of our position at $318.10 instead of the $318.50 stop like I said yesterday.  I still have the call spreads in place to the upside in the event I am wrong because we still need protection.  I will look for an opportunity to purchase these futures at a lower price if we can.

Bottom line: I’m looking for the market to have follow through to the downside tonight/tomorrow and experience an early low and a late high.  I still feel the market is near a top and today could very well be this week's high.  I will wait to re-enter an aggressive position in the market until we get back near $300.00 if we get there.  Technically speaking there could be more sell stops below $314.50 tomorrow. 

May '09 Meal - Support/Resistance for 04-16-09
(R3) Resistance 3: $321.80

(R2) Resistance 2: $319.30

(R1) Resistance 1: $318.60

Today's close: $317.30
(S1) Support 1: $315.50

(S2) Support 2: $313.10

(S3) Support 3: $310.90

_________________________________________________________________________


HOGS - June ‘09 GLOBEX
Open - $72.75, High - $73.475, Low - $72.00, Close - $73.05 Up $.45
Thoughts - Long Term
(6 months) - Friendly

Yesterday I said:
I’m looking for the market to be higher tonight/tomorrow and experience an early high and a late low.  I look for support to be $72.60, $71.95 and $71.05.  Resistance should show up at $73.35, $73.55 and $74.25.  I expect the June ‘09 hog contract to open higher tonight and follow through with early strength because of higher cash and cutout but falter as the day progresses.  I am looking for a test of $70.52 within the next week if we close below $72.70 tomorrow in the June ‘09 contract."

June ‘09 hogs:  I haven't altered my thoughts on the June '09 hog contract for now as I believe it has some room to move to the downside in the next week or so.  Cash and cutout were both higher this afternoon so it should give the market a small boost tomorrow.  Today we retraced around 62% of yesterday's move which is typical but the low of today also completed a 62% retracement back to our low of $70.52 from March 30th.  The market is trending lower but I still need to see a close below $72.70 if we are going to test $70.52 and we didn't get it today. 

Bottom line: I’m looking for the market to be higher tonight/tomorrow and experience an early high and a late low.  I expect the June ‘09 hog contract to open higher tonight and follow through with early strength because of higher cash and cutout but falter as the day progresses. Seasonally we tend to move lower from today's close until the April 30th close and I will stick with the 80% odds of that seasonality along with the other signals that show up to support that type of move.

June '09 Hogs - Support/Resistance for 04-16-09
(R3) Resistance 3: $74.25
(R2) Resistance 2: $73.75
(R1) Resistance 1: $73.475
Today's close: $73.05
(S1) Support 1: $72.55
(S2) Support 2: $72.15
(S3) Support 3: $70.525

 

NW_LS500
Des Moines, IA     Wed, Apr 15, 2009     USDA Market News

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

Compared to Tuesday's Close:        Fresh bone-in loins 2.00-6.00
higher; butts steady to 3.00 lower; sknd hams 20-27 lbs 2.00 higher; sdls
bellies not established; lean trimmings steady. Trading slow, with light to
moderate demand and offerings.



-----------------------------------------------------------------
Loads PORK CUTS          :              58.5
Loads TRIM/PROCESS PORK  :              15.0
-----------------------------------------------------------------

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
-----------------------------------------------------------------------
04/15        73.5      61.26   75.63   69.53  34.38 103.19 49.53  76.71
Change :                0.60   -1.33    0.68  -5.46  -0.13  5.98   0.03
-----------------------------------------------------------------------

NW_LS831
Des Moines, IA     Wed, Apr 15, 2009     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 :   .83 hgr   :   .70 hgr   :   .79 hgr   :   .78 hgr
Negotiated      :             :             :             :
CARCASS BASIS   : 46.00-58.45 : 52.70-58.45 : 46.00-58.45 : 47.50-58.00
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    56.09    :    56.50    :    56.69    :    55.05
--------------------------------------------------------------------------
Head Count      :   23,141    :    9,987    :   14,840    :    8,101
==========================================================================

 

 

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Hurley & Associates believes positions are unique to each person’s risk bearing ability; marketing strategy; and crop conditions, therefore we give no blanket recommendations. The risk of loss in trading commodities can be substantial, therefore, carefully consider whether such trading is suitable for you in light of your financial condition. NFA Rules require us to advise you that past performance is not indicative of future results, and there is no guarantee that your trading experience will be similar to the past performance.


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