Hog & Corn Comments - 02-03-09 - Hogs fake a selloff and rally into the close!

Published on: 22:19PM Feb 03, 2009

Hog Comments - 02-03-09 - Hogs fake a selloff and rally into the close!

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Jeremy Knutson

This is going to be short and sweet tonight so here it goes.  Corn did not close below the $3.59 1/2 area I have been talking about it.  I said yesterday that I didn't think we would have a close below that level and the market gods almost made an example out of me today but they didn't.

Bottom line - I am looking for better trade tomorrow, March '09 touched my resistance level of $3.72 1/4 exactly today this also was the high.  I think we will have an early low and a late high tomorrow.  I am continually adding to my long call position as I bought more today.


I bought more meal today to get back up to a full position in the March '09 contract.  I was able to get my purchases done at $300.60 on average and this is against my $290.00 puts so I still have the downside open if I am wrong.

Bottom line - I expect a test of $305.50 tomorrow which was today's high.  The March '09 contract needs to close above $305.00 again soon for me to be confident we are going to make a move higher.  I have my finger on the trigger if the market feels heavy because my cycle indicator still points lower but there are other signs we could be moving higher for the time being.  I will continue to monitor this position closely.


April '09 hogs set out to make me look like an idiot again today but then ended up validating my opinion from yesterday of early lows and late highs.  The market sold off hard early in the session being down over $1.00/cwt at one point and then rallied into the closing hours of the session.

Bottom line - I expect buy stops above today's high of $62.52 and from there we could see some acceleration to the upside.  I am looking for an early low again tomorrow and a late high because I really liked today's action.  We challenged Friday's low and even made a new one and came charging right back, I LIKE IT A LOT.  I don't want to count my chickens before they are hatched but I like the hog market more and more each day.   


 NW_LS500 Des Moines, IA     Tue, Feb 03, 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 loins generally steady; butts steady; sknd hams 17-23 lbs not tested, 23-27 lbs steady; sdls bellies and lean trimmings steady. Trading slow to moderate, with light to moderate demand and offerings.    ----------------------------------------------------------------- Loads PORK CUTS          :             91.75 Loads TRIM/PROCESS PORK  :              19.0 -----------------------------------------------------------------  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 ----------------------------------------------------------------------- 02/03       110.8      57.00   75.63   60.18  36.54 101.57 38.63  72.31 Change :                0.21    0.70   -0.17   1.06   0.36 -0.13  -0.10 -----------------------------------------------------------------------
 NW_LS831 Des Moines, IA     Tue, Feb 03, 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 :   .62 lwr   :   .64 lwr   :   .66 lwr   :   .19 hgr Negotiated      :             :             :             : CARCASS BASIS   : 42.50-61.49 : 45.00-61.49 : 45.00-61.49 : 42.50-60.81 185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg Plant Delivered :    57.24    :    58.90    :    59.20    :    54.28 -------------------------------------------------------------------------- Head Count      :   34,012    :   14,994    :   20,402    :   13,598 ========================================================================== 


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