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CORN – Dec ‘09 Electronic
Open – $3.86, High – $3.89 1/2, Low – $3.79 1/4, Close – $3.84 1/2 Down $.01 3/4
Thoughts – Long Term (into December ‘09) – Sideways
Dec ‘09: The Dec '09 corn market was relatively quiet today trading both sides of unchanged in what was a lower volume day compared to what we have seen in recent days. The market made a new high overnight but failed to hold the higher levels as the evening progressed. We spent most of today's trade session lower but managed to muster up some buying near 1:00 p.m. CST in an effort to challenge the overnight high.
I don't have much to add over yesterday's comments, I am still skeptical of corn the corn price at these levels and we don't aggressively own any corn at this point. We have some upside coverage in place with a call spread and we will maintain this position for now. We did delta hedge our long call spread position today by selling some futures to neutralize our strategy in the event the market moves lower but will still give us upside on a majority of our core position if the market moves higher.
As per yesterday's statements, the market will have a tough time breaking hard until we get a clear window of opportunity to harvest the crop and additional yield reports begin coming in. If the Dec '09 contract closes above $3.88 for two consecutive days I will then adjust my attitude to the market but until then I'm skeptical.
Bottom line: I am looking for the market to experience an early high tomorrow.
Dec ‘09 Corn – Support/Resistance for 10-21-09
(R3) Resistance 3: $4.04 3/4
(R2) Resistance 2: $3.94 1/2
(R1) Resistance 1: $3.89 1/2
Today’s close: $3.86 1/4
(S1) Support 1: $3.79 1/2
(S2) Support 2: $3.74 1/4
(S3) Support 3: $3.64
MEAL – Dec ‘09 Electronic
Open – $298.60, High – $301.30, Low – $293.30, Close – $292.50 Down $5.80
Thoughts – Long Term (into November ‘09) – Sideways/Higher
Dec ‘09 meal: Similar to corn we didn't have much of a day in meal today. We continue to hold some support at the $294.20 level but I'm still of the opinion we could test the $288.90 to $283.50 level in the Dec '09 contract. As stated yesterday the weather issues are typically more bark than bite but we are still behind harvesting our nation's crop compared to the averages.
The Dec '09 contract had a poor weekly close last week and may provide more downside pressure as the week progresses. Weather will ultimately decide where the grain markets trade over the coming weeks but looking at a chart in meal it says take notice to the downside in the short-term.
Bottom line: I’m looking for the market to experience an early high and late low tomorrow.
Dec ‘09 Meal – Support/Resistance for 10-21-09
(R3) Resistance 3: $311.70
(R2) Resistance 2: $303.70
(R1) Resistance 1: $298.10
Today’s close: $292.50
(S1) Support 1: $290.10
(S2) Support 2: $287.70
(S3) Support 3: $279.70
HOGS – Dec ‘09 GLOBEX
Open – $54.15, High – $54.95, Low – $52.10, Close – $52.875 Down $1.175
Thoughts – Long Term (into December) – Negative
Dec ‘09 hogs: Dec hogs made a new high of $54.95 in Globex trade prior to the day session open and then as the pit opened nearly $.50 higher the market sold off and then popped hard to the downside. There was a sell signal triggered this morning at $54.725 in the Dec contract and would project a violent move lower if the signal is good and if the market closes above $54.95 tomorrow then it could have the reverse effect and be bullish opening the door to $59.15.
I failed to mention this signal in yesterday's comments because I didn't notice it until this morning for which I apologize. We also had a reversal day in the Dec hogs today, the correlation charts are showing a high being put in during this time-frame and we have a cycle high projected as of last week and pointing lower into Thanksgiving. I have been skeptical of this hog market for the last couple of weeks as it's rallied because the fundamentals were not keeping pace but Dec '09 remained strong and closed above a key level for me of $53.10. Closing above $53.10 for two consecutive days forced me to be reluctantly friendly to the Dec '09 futures but we kept getting warning signals of a market that is possibly topping.
Today confirmed my thoughts of the market running out of steam but it doesn't mean much if we don't get some follow through selling tomorrow which looks likely at this point unless we have a major surprise in cash or cutout tonight.
As I've stated for some time now, I think this is an excellent time to get some downside protection in place on hogs that need to be hedged and would still use a known risk strategy as a hedge vehicle.
Bottom line: I’m looking for the market to make an early high tomorrow.
Dec ‘09 Hogs – Support/Resistance for 10-21-09
(R3) Resistance 3: $55.875
(R2) Resistance 2: $54.50
(R1) Resistance 1: $53.30
Today’s close: $52.875
(S1) Support 1: $51.65
(S2) Support 2: $50.45
(S3) Support 3: $49.875
(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.