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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 - 04/21/09 - Hogs are flat today as grains rally.

Apr 21, 2009

Hog Comments - 04/21/09 Hogs are flat today as grains rally.

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 - $3.70, High - $3.79, Low - $3.68 1/2, Close - $3.74 Up $.04 1/2.

Thoughts - Long Term (6 months) - Bullish/Higher
Thursday I said: My thoughts on corn getting stronger as the day progressed on Friday was obviously wrong and therefore I did not place my order to buy at $3.76 3/4 like I said I was going to.  This is why I don't recommend doing as I write because I have the luxury of changing my mind before you read about it.  If you have questions about something either email or call me!  I had an order in today at $3.47 which is near down limit as a just in case order not expecting it to get there and it didn't.  I also had an order during the last hour of trade to buy at $3.65 against my long $3.80 May '09 puts.  This is an effort to manage the equity that I have in the $3.80 puts as well as give me a synthetic call option through Friday.  

As I mentioned before I have a cycle taking us lower this week however there is one thing I want to pay attention to and that is the open we had for May '09 corn on Sunday night.  We opened at $3.74 3/4 when the weekly low was $3.76, this is a POTENTIALLY friendly opening.  We have also backed off $.47 from the high of April 2nd to today's low so I am not that bearish at these levels.”

May ‘09 corn:  As mentioned I am not bearish at these levels give the decline we've had.  Today was actually a pretty quiet day as it relates to volume so I'm not buying into this rally attempt.  As of right now I am keeping my options open to purchase corn at a lower level with a preference of $3.67 1/2 if I can.  I will be looking for this number tomorrow as I think the market has potential get near it tomorrow.

Bottom line: I am looking for the market to experience an early high and a late low tomorrow.  I will continue to try and buy around $3.67 1/2.

May '09 Corn - Support/Resistance for 04-22-09
(R3) Resistance 3: $3.81 1/4
(R2) Resistance 2: $3.79
(R1) Resistance 1: $3.76 3/4
Today's close: $3.74
(S1) Support 1: $3.73 3/4
(S2) Support 2: $3.70 1/2
(S3) Support 3: $3.67 1/2
_________________________________________________________________________

MEAL - May ‘09 Electronic
Open - $319.20, High - $325.50, Low - $317.90, Close - $325.30 Up $6.10
Thoughts - Long Term (6 months) - Bullish/Higher
Thursday I said: "I continue to think the meal market has room for decline but tomorrow looks like an early low and late high type day.  The May '09 meal contract is looking to confirm Friday's high of $333.90 as its high for the planting season.  It wouldn't be surprising to see May '09 meal trade back near $305.80 which would be 50% of the most recent move.  I will not chase the meal market at these levels but I still have a call spread in place to give me protection if the market moves higher on about 60% of my needs.  I'm looking for a pull back toward $305.80 in the May '09 contract.

May ‘09 meal: I said it yesterday and I will say it again today; I am not willing to chase the meal market at these levels.  I have confidence in saying this because I have call spreads in place to allow me to be wrong directionally but still keep business under control.  May '09 meal still needs to get back above $326.00 on a daily close before I think we can test our old high of $333.90 so that said, I will maintain my negative bias toward the meal market. 

Bottom line: I’m looking for the market to have follow through to the upside early tonight/tomorrow and experience an early high and a late low.

May '09 Meal - Support/Resistance for 04-22-09
(R3) Resistance 3: $329.40

(R2) Resistance 2: $327.90

(R1) Resistance 1: $325.50

Today's close: $325.30
(S1) Support 1: $323.70

(S2) Support 2: $322.10

(S3) Support 3: $320.90

_________________________________________________________________________

HOGS - June ‘09 GLOBEX
Open - $72.40, High - $72.75, Low - $72.20, Close - $72.40 Up $.10
Thoughts - Long Term
(6 months) - Friendly
Thursday I said: After looking at today's June '09 contract close I see that today was the lowest close we've had since April 2nd, 2009.  Looking at the cycle still showing lower into ultimately next week and the intra-day chart showing a small retracement of today's larger down move early in the day; I don't have a ton of good to say about the market.  I am sure with producers in the fields doing work we could see the cash market stay firmer as we move forward but the charts don't show me anything to get excited about.  I will continue to stay short with my call strategy in place to give me upside potential if I am wrong.  Based on my cycle indicator I see weakness into May 4th."

June ‘09 hogs:  June really didn't do much today as we traded within yesterday's range and failed to show anything of significance to change my mind on the market which is lower.  I need to see the June '09 contract close above $72.75 for a couple days before I will say we could test $73.85 again.  I am still of the opinion the market has more downside for the time being.  

Bottom line: I’m looking for the market to be higher tonight/tomorrow and experience an early high and a late low and I'm staying hedged for now.  If we close below $72.175 tomorrow and Thursday then I am looking for a test of $70.52.

June '09 Hogs - Support/Resistance for 04-22-09
(R3) Resistance 3: $73.75
(R2) Resistance 2: $73.00
(R1) Resistance 1: $72.75
Today's close: $72.40
(S1) Support 1: $72.20
(S2) Support 2: $71.675
(S3) Support 3: $71.22

 

NW_LS500
Des Moines, IA     Tue, Apr 21, 2009     USDA Market News

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

Compared to Monday's Close:         Fresh 1/4" trim loins steady
to 1.00 lower; butts unevenly steady; sknd hams 20-23 lbs steady, 23-27 lbs
mostly 1.00-3.00 lower; sdls bellies 4.00 lower; lean trimmings not established.
Trading slow to moderate, with mostly light demand and mostly moderate to heavy
offerings.


-----------------------------------------------------------------
Loads PORK CUTS          :             100.0
Loads TRIM/PROCESS PORK  :               2.0
-----------------------------------------------------------------

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
-----------------------------------------------------------------------
04/21       102.0      59.91   73.12   70.56  38.85 106.46 45.90  72.78
Change :               -0.80   -2.11   -0.44   2.68   1.06  0.23  -4.42
-----------------------------------------------------------------------

NW_LS831
Des Moines, IA     Tue, Apr 21, 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 :  1.84 hgr   :  2.70 hgr   :  2.16 hgr   :   .45 hgr
Negotiated      :             :             :             :
CARCASS BASIS   : 49.00-64.00 : 49.00-64.00 : 49.00-64.00 : 49.25-60.54
185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg
Plant Delivered :    60.90    :    62.17    :    61.92    :    58.38
--------------------------------------------------------------------------
Head Count      :   32,751    :   18,263    :   23,121    :    9,405
==========================================================================

 

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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