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CORN – Dec ‘09 Electronic
Open – $3.40 1/2, High – $3.44 1/4, Low – $3.35 1/2, Close – $3.44 Up $.03
Thoughts – Long Term (into December ‘09) – Sideways
09/28/09 I said: "The Dec '09 corn contract is still looking for a solid direction to trade. The rumor last week was a fund or funds were going to start allocating some money to corn therefore many were trying to front run the rumored fund buying that will supposedly start in October. We are maintaining upside coverage in corn because we have hedges in place for hogs. We do have the downside open which allows us to capture lower prices if the crop size continues to grow.
Fundamentally the corn crop seems as if it will be huge but we haven't gotten enough harvest information to prove it. The early yield reports are pointing to a very large crop.”
Dec ‘09: The Quarterly Stocks report put out by the USDA had a slight reduction in carryout compared to the average trade analyst guess which provided some support today. I am still of the same opinion that we have a rather large crop waiting to be harvested but until it is in the bin we can only wonder what's out there. The trade is also adding some small premium for the weather forecast being wet and having the potential to hinder harvest. I don't believe much has been factored in other than it is supporting the market at current levels.
We remain long via a call spread to protect against higher prices and to complete the crush on hogs. I am skeptical of how high corn can go with full blown harvest just around the corner. We don't have to look back very many years to see corn rally at harvest thus the call spread for protection against higher prices.
Bottom line: I am looking for the market to experience an early high tomorrow.
Dec ‘09 Corn – Support/Resistance for 10-01-09
(R3) Resistance 3: $3.58 3/4
(R2) Resistance 2: $3.50
(R1) Resistance 1: $3.47
Today’s close: $3.44
(S1) Support 1: $3.38 1/4
(S2) Support 2: $3.32 1/2
(S3) Support 3: $3.23 3/4
MEAL – Dec ‘09 Electronic
Open – $283.50, High – $286.60, Low – $280.00, Close – $285.50 Up $.70
Thoughts – Long Term (into November ‘09) – Sideways/Higher
09/28/09 I said: “Not much has changed in the meal market I am still looking for higher prices for now as the old lows have held support. The same thought applies to meal as we hold long positions because we are short hogs. At this point the downside isn't open but will monitor our position closely to look for signs downside reversal. We are currently up against some resistance at $285.50 in the Dec '09 contract. If the market wants to continue higher we will need to closes above $285.50 in the coming days to keep the technicals pointing higher.
Keep upside coverage in place with a known risk strategy if you don't have it already because the weekly chart still shows the potential for a breakout to the upside.”
Dec ‘09 meal: We were choppy today in the meal market starting out lower then reversing back to the upside. The daily chart is beginning to show signs of losing momentum of from the most recent move higher. I don't have the Dec '09 contract topping out (per cycle indicators) until approximately October 8th. We continue to be long Dec '09 meal and will stay that way until we see reason not to be. As mentioned in corn, the market place is beginning to add premium into the market place for rains that may hinder harvest activities.
Bottom line: I’m looking for the market to experience an early low and late high tomorrow.
Dec ‘09 Meal – Support/Resistance for 10-01-09
(R3) Resistance 3: $297.20
(R2) Resistance 2: $290.60
(R1) Resistance 1: $288.00
Today’s close: $285.50
(S1) Support 1: $281.40
(S2) Support 2: $277.40
(S3) Support 3: $270.80
HOGS – Dec ‘09 GLOBEX
Open – $49.80, High – $50.00, Low – $48.55, Close – $49.60 Down $.575
Thoughts – Long Term (into December) – Negative
09/28/09 I said: “Broken record time, not much has changed since my last post. We had the Quarterly Hog & Pig report last Friday which showed little in the way of herd reduction therefore not painting a bullish picture overall for the long-term. Now, these are futures markets and things change so this doesn't mean we are at our highs for the next 12 months in the summer months, it just means we still need to reduce our supply.
As mentioned earlier we had a cycle high in the Dec '09 contract between the 16th and 18th of September which is exactly when the most current high occurred. I still believe this is a good opportunity to get know risk strategies in place for hogs being hedged in the Dec '09 contract or even for hogs delivered later than Dec '09. Today's close wasn't impressive on the daily chart and signals more downside and a conditional sell signal at $50.20 STOP. The conditions for this sell signal is the Dec '09 contract NEEDS to trade above $50.50 before the $50.20 sell STOP signal is generated. If the signal is generated then a risk management protective buy stop would be placed $.50 above the most current intra-day high."
Dec ‘09 hogs: Dec hogs had an interesting day to say the least; we were down over $1.40 at one point then rallied back and closed down $.575 on the day. It still seems like this market doesn't know what it wants to do, however, today was the end of month AND end of quarter. When we have end of month and end of quarter trade we can see the market do weird things because money can be flowing for different reasons which have nothing to do with fundamentals. This could be the case for today based on the way the market rallied near the end of trade.
I talked about the sell signal at $50.20 stop the other day; it was triggered and is currently still active. The risk management buy stop order for this trade is currently $51.30 but will move lower along with the market assuming that is the direction we move. The Dec contract still provides good opportunity to enter into a limited risk strategy on bounces from these levels. We are hedged and will continue to be hedged until the market or better yet the industry tells us differently. We have coverage in place to provide upside to $58.00 in the Dec '09 contract if we need it.
I think most of today's end of day buying had to do with funds moving money around for the end of the month/quarter so they can get paid. I'm not paying much attention to today's trade in the grand scheme of things.
Bottom line: I’m looking for the market to make an early low tomorrow.
Dec ‘09 Hogs – Support/Resistance for 10-01-09
(R3) Resistance 3: $52.325
(R2) Resistance 2: $50.875
(R1) Resistance 1: $50.275
Today’s close: $49.60
(S1) Support 1: $48.75
(S2) Support 2: $47.95
(S3) Support 3: $46.50
(S4) Support 4: N/A
(S5) Support 5: N/A
(S6) Support 5: N/A
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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.