CORN - May '09 Electronic
Open - $3.64 1/2, High - $3.84, Low - $3.64 1/4, Close - $3.75 1/2 Up $.10
I said yesterday "I am looking for May '09 corn to open unchanged to lower tonight based on follow through from the close today. I see support at $3.64, $3.62 1/2 and then $3.58, I see resistance at $3.67 then $3.70. I am expecting early follow through weakness tonight and MAYBE tomorrow morning but I am looking for an early low and a late high tomorrow. We need a close above $3.68 to gain more strength for a run at the upside but for now I believe selling will surface just below today's low."
My first level support point was almost right on today but I was only off on resistance by $.14! I expected to see a small correction before we made a move like we had today but obviously that wasn't the case. The stock market helped get things going this morning because Citibank stated it had a profitable first two months of 2009 which is the best they've had since the third quarter of 2007; Wells Fargo made a similar comment last Friday. This got stocks moving higher in pre-market and then the Government stated they would bring back the "up tick rule" in the stock market which sent the Dow Jones above 300 points higher. They also made a comment that they will review mark to market accounting.
Bottom line - I am still looking for a place to buy May '09 corn against $3.60 put options as the market didn't get to my target levels over the past couple of days. We have now traded substantially above the downtrend line in the May '09 contract and I look for a close above $3.68 for a couple of days before getting extremely excited about a major rally. Support for tomorrow is $3.74 $3.71 3/4, $3.69 and resistance should be $3.81 1/4 and then $3.84. The market created a sell signal at $3.79 1/2 in the May '09 contract today with a protective buy stop at $3.85.
MEAL - May '09 Electronic
Open - $265.00, High - $273.90, Low - $264.40, Close - $271.30 Up $6.30
Reviewing yesterday's comments I said " I am looking for an early low and late high tomorrow with support at $264.50 and $263.10 and resistance to be $267.50 and $270.50. I am still in the camp of soybean meal looking for a bottom therefore I have call options in place to give us upside protection in the event of a rally. I want upside protection at these levels but I want known risk thus the use of options."
I was very close with my first level of support in May '09 meal but like corn I was off on my resistance number but not near as bad as I was in corn. I have been saying I am looking for the market to bottom in here but we have failed to get any type of rally going that is sustainable. Today we closed above a key level of resistance of $270.50 which is the 62% retracement level back to the contract low. A close above this level looks positive but we need more than just one, I would like to see follow through to the upside tomorrow and another close above $270.50 before I get very excited about rally attempts.
Bottom line - I am looking for tonight/tomorrow's trade to open on weaker tone and test support at $269.20 to $268.00 before finding support. As I said above we need to see the market continue to close above $270.50 before I think we can make a bigger move higher. If you don't have upside protection in place I would make sure you visit with someone who can help you with this need. Support for tomorrow is $269.20, $268.00 then $264.40 and resistance is $272.30 and $273.90.
HOGS - June '09 GLOBEX
Open - $73.00, High - $73.25, Low - $71.60, Close - $71.70 Down $1.50
As a review from yesterday I said "I am looking for the June '09 hogs to test $72.37 with an ultimate test of $71.90. If we close below $71.90 for a couple of days then I would expect a test of $71.30 to $69.55 area. I see June '09 trading lower tomorrow in the early stages of the day and possibly finding support later in the session however I think any rally we have tomorrow will be sold by professional traders. I don't like the market here unless we start to see big moves to the upside in the cutout numbers. Support for tomorrow is $72.37 and $71.90 where resistance is at $73.60, $73.77 and then $74.30 although I don't think it is likely we will see the topside of resistance tomorrow. Today looked pretty ugly on the charts (in my opinion)."
Not much has changed from what I said yesterday or late last week, I am not short-term friendly June '09 hogs at these prices until something significant changes with cutout. Packer margins are still in the red and it business principles would suggest you can't slaughter hogs at a loss for an extended period of time, something has to give. Again, my decisions are based on chart action with followed by an awareness of fundamental information so I am more concerned with the way the chart looks than anything.
Bottom line - I am looking for continued downside tomorrow with pressure more than likely mounting. We closed below my support area of $71.90 today and if we continue to close below it we should test $69.525 in short order. If we test and close below $69.52 then ouch, another leg lower is possible. Support for tomorrow is $71.35 then $69.525 and resistance is $72.425 then $72.62 then today's high of $73.25. I expect a weak day of trade tomorrow with the majority of negativity coming early in the day as the charts look like we could find support later in the session.
I had to post these comments prior to the cash and cutout information release by the USDA this afternoon, my apologies. Below are the links to the USDA site to get this information.
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