Hog & Corn Comments – 03/15/10 Profits are back, should you take some?
Mar 15, 2010
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CORN – May ‘10 Electronic
Open – $3.65, High – $3.66 1/4, Low – $3.62, Close – $3.63 1/4 Down $.01
Thoughts – Long Term (into June ‘10) – Sideways/Lower
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May ‘10: It has been awhile since I've posted any comments because of some new software development we have been going through to help producers make business minded decision based on their own data. As these projects are now wrapping up I hope have more commentary out there as we move forward. $3.59 is a key area of the May '10 corn contract, if we close below this level for two consecutive days then we could see another leg lower in the market. I assume the market will make a run at $3.59 for a good test of support and if it's there then we could see a bounce higher. I am not a long-term bull in corn at this point unless there is some major event that changes the fundamental picture.
Most corn months allow for profits to be made in pigs which only works if you sell your hogs and buy meal as well. Keep in mind the basis levels can very greatly so take that into consideration if looking at selling hogs and buying corn and meal. Deferred packer basis, if you were to forward contract, looks ugly but when you use the five year average basis profits look rather encouraging.
Bottom line: I am looking for the market to experience an early high tomorrow and then fade as the session progresses. If you were going to lock in May corn for some reason tomorrow I would wait until later in the day to do so.
May ‘10 Corn – Support/Resistance for 03-16-10
(R3) Resistance 3: $3.72 1/4
(R2) Resistance 2: $3.68
(R1) Resistance 1: $3.65 3/4
Today’s close: $3.63 1/4
(S1) Support 1: $3.61 1/2
(S2) Support 2: $3.59 1/2
(S3) Support 3: $3.55 1/4
MEAL – May ‘10 Electronic
Open – $252.10, High – $258.10, Low – $251.00, Close – $257.60 Up $6.30
Thoughts – Long Term (into June ‘10) – Sideways
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May ‘10 meal: Meal had a good close today and allowed the weekly chart to show signs of a short-term bottom, the only problem is today is Monday and the weekly charts don't mean much until we get a Friday close. Last week's close was rather ugly and pointed to more possible downside as we closed below some key support of $254.00. It looks like we should see more follow through to the upside tonight before we find some resistance and then weaken during tomorrow's trade.
Meal, like corn is allowing for Hog producers to lock in some good profits with current price levels so take a look at your situation and make some business decisions on what to do and don't worry about whether the market is going to move higher or lower!
Bottom line: I’m looking for the market to experience an early high tomorrow.
May ‘10 Meal – Support/Resistance for 03-16-10
(R3) Resistance 3: $269.80
(R2) Resistance 2: $262.70
(R1) Resistance 1: $260.10
Today’s close: $257.60
(S1) Support 1: $253.00
(S2) Support 2: $248.50
(S3) Support 3: $241.40
HOGS – Apr ‘10 GLOBEX
Open – $72.75, High – $72.75, Low – $71.575, Close – $71.80 Down $.85
Thoughts – Long Term (into April) – Neutral/Lower
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Hog margins continue to show some profit for the coming year. If you would like to run a profitability crush for your operation, email us at email@example.com.
Apr‘10 hogs: April futures have provided us with a near double top and is in the downward portion of the cycle high that was posted on March 5th, 2010. My cycle indicator has the April contract moving lower March 30th before it stabilizes. Cutout is near its high for the year and near the highs of the last two years. Exports will be important moving forward so the dollar is on my radar, we were up strong today but we are coming off of recent sideways to lower action. The Dollar index is trading in a range and if it breaks out above 81.32 we could move a lot higher to 81.90 then 83.70.
The weekly dollar charts have shown us signs of topping for the last five weeks but the market remains stubborn and is holding on in a sideways pattern. 79.55 is the number we need to watch to the downside and will have just as much importance as the 81.32 number I spoke of earlier.
Hogs are providing some VERY attractive opportunities right now with corn and meal at current levels so it is worth while to sit down and figure out where you are at to see if you should be locking in some of these profits. We are getting more aggressive as each day passes and will continue to do so as profits allow us too. It has been a nasty last couple of years for the industry and it is hard to pass up the profits if you can make them! Look hard at locking in profits soon.
Bottom line: I’m looking for an early low tomorrow.
Apr ‘10 Hogs – Support/Resistance for 03-16-10
(R3) Resistance 3: $74.40
(R2) Resistance 2: $73.225
(R1) Resistance 1: $72.50
Today’s close: $71.975
(S1) Support 1: $71.325
(S2) Support 2: $70.875
(S3) Support 3: $69.70
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