Corn – May ’11 Corn managed to shake off some lower trade early in the session today and make the session high near the close of the day. That continues to give good reason to believe we should test $7.44 1/4 this week. It appears as if tomorrow could be the day the market decides to test the $7.44 1/4 target. My intra-day cycles suggest we have an early high tomorrow but I’m not sure I’m buying into that thought at the moment.
If the market does manage to get above $7.44 1/4 and close there for two consecutive days then I think we will make a quick run up to the $8.00 area and test 2008 high’s and try to create a new one. If the market fails to close above $7.44 1/4 within the next several days then I suspect we will make another move back down below the $7.00 level. I’m of the opinion that we see new highs myself.
There have been warning signals on the weekly charts that corn may be slowing down over the past couple of weeks. This could all be negated if we close above $7.44 1/4 on Friday. The Dollar index remains weak and looks poised to challenge the 75.63 low from November of 2010.
Bottom Line – Today’s trade was in line with our thinking and tomorrow calls for an early high and a late low but if we make a solid run at the $7.44 1/4 high then all bets are off.
Meal – May ’11 meal was held lower for the day today but found some support around $359.20. It looks like the trade action today should have been enough to get the downside movement out of the way for a higher trade tomorrow. The daily chart still suggests that we move higher over the coming weeks and if corn remains strong there should be good reason for meal to firm. I’m still looking for a near-term test of $371.90 which was last week’s high and anything above that should trigger more buying.
Bottom Line – Based on today’s action I’m looking for an early low tomorrow.
Hogs – Apr ‘11 hogs had a buy signal last Thursday and Friday which I said I was skeptical of and today is the reason why. The buy signal failed as a result of today’s trade activity. The April ’11 contract did touch some support at $88.75 and if we manage to hold this level I think we could see another move higher but I don’t know if we have enough positive news to make a run at the $95.00 high.
The cutout was marginally lower tonight as well as the cash market. The hourly chart suggests that we make an early low tomorrow and rally from there. If corn and meal are on the plus side for the day (which I believe they will be) I think we could see some recover in the hogs. Again as I said last week I’m not very negative to the deferred contracts because of its relationship to corn and meal. This doesn’t mean I wouldn’t sell rallies because I don’t think our cash price will be at the levels the futures suggest when we get to expiration.
Stick to business and make your marketing decisions based on your profits and life will be much easier!
Bottom Line – I’m looking for an early low in the April ’11 hogs tomorrow as we continue to search for market direction.
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