Hog & Corn Comments - 04/20/09 - Most Ag commodities take a break today.

Published on: 16:54PM Apr 20, 2009

Hog Comments - 04/20/09 - Most Ag commodities take a break today.

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CORN - May ‘09 Electronic
Open - $3.74 3/4, High - $3.84, Low - $3.60 1/2, Close - $3.69 1/2 Down $.06 3/4.

Thoughts - Long Term (6 months) - Bullish/Higher
Thursday I said: The May '09 corn contract is indeed looking for a bottom for the week but it doesn't seem to want to stop moving lower.  I had an order in to buy May '09 corn at $3.76 3/4 to re-own what I exited at $4.03 but I didn't get my fill.  I still have a bull call spread in place in case I am wrong.  I think we will have an early low tomorrow and a late high because of the downward movement we've had this week and Friday profit taking and position squaring going into the weekend.  I still have a cycle projection for corn to be soft (lower) into the week of next week.

May ‘09 corn:  My thoughts on corn getting stronger as the day progressed on Friday was obviously wrong and therefore I did not place my order to buy at $3.76 3/4 like I said I was going to.  This is why I don't recommend doing as I write because I have the luxury of changing my mind before you read about it.  If you have questions about something either email or call me!  I had an order in today at $3.47 which is near down limit as a just in case order not expecting it to get there and it didn't.  I also had an order during the last hour of trade to buy at $3.65 against my long $3.80 May '09 puts.  This is an effort to manage the equity that I have in the $3.80 puts as well as give me a synthetic call option through Friday.  

As I mentioned before I have a cycle taking us lower this week however there is one thing I want to pay attention to and that is the open we had for May '09 corn on Sunday night.  We opened at $3.74 3/4 when the weekly low was $3.76, this is a POTENTIALLY friendly opening.  We have also backed off $.47 from the high of April 2nd to today's low so I am not that bearish at these levels. 

Bottom line: I am looking for the market to experience an early low and a late high because of my comments about high to low movement in the paragraph above.  I will continue to try and buy around $3.65 or HIGHER if it looks like things may turn up.  

May '09 Corn - Support/Resistance for 04-21-09
(R3) Resistance 3: $3.76 3/4
(R2) Resistance 2: $3.73 3/4
(R1) Resistance 1: $3.71 1/4
Today's close: $3.69 1/2
(S1) Support 1: $3.65 3/4
(S2) Support 2: $3.64 1/2
(S3) Support 3: $3.60 1/2


MEAL - May ‘09 Electronic
Open - $326.00, High - $331.00, Low - $318.50, Close - $319.20 Down $7.40
Thoughts - Long Term (6 months) - Bullish/Higher
Thursday I said: "Reading my thoughts from yesterday proves the market has a mind of its own and will do what it pleases as it screamed through my resistance levels.  The sell stops below $314.50 were never tripped today because the market never got that low.  There is another potential sell signal setup tonight if the market opens above $329.40 and trades below this level it will trigger a sell on the candle stick charts.  I am keeping my call spreads in place for now to maintain ownership if the market continues to move higher and will look to get more aggressive positions in place on a price decline.

May ‘09 meal: I continue to think the meal market has room for decline but tomorrow looks like an early low and late high type day.  The May '09 meal contract is looking to confirm Friday's high of $333.90 as its high for the planting season.  It wouldn't be surprising to see May '09 meal trade back near $305.80 which would be 50% of the most recent move.  I will not chase the meal market at these levels but I still have a call spread in place to give me protection if the market moves higher on about 60% of my needs.  I'm looking for a pull back toward $305.80 in the May '09 contract.

Bottom line: I’m looking for the market to have follow through to the downside early tonight/tomorrow and experience an early low and a late high.

May '09 Meal - Support/Resistance for 04-21-09
(R3) Resistance 3: $328.00

(R2) Resistance 2: $326.20

(R1) Resistance 1: $322.30

Today's close: $319.20
(S1) Support 1: $318.50

(S2) Support 2: $315.90

(S3) Support 3: $312.40


HOGS - June ‘09 GLOBEX
Open - $73.20, High - $73.20, Low - $71.675, Close - $72.40 Down $1.325
Thoughts - Long Term
(6 months) - Friendly
Thursday I said: The early high and late low happened again today and tomorrow is showing signs of similar activity.  Today's trade action on the daily chart was nothing to brag about as we closed near where we opened.  The cash market was lower at noon which gave an excuse for the futures to move lower the balance of the day.  As stated in the above paragraph I am sticking to a cautious short-term outlook in the hogs as we move into the last half of April with the seasonal tendency to move lower in years where we closed above $70.00 on April 15th in the June contract."

June ‘09 hogs:  After looking at today's June '09 contract close I see that today was the lowest close we've had since April 2nd, 2009.  Looking at the cycle still showing lower into ultimately next week and the intra-day chart showing a small retracement of today's larger down move early in the day; I don't have a ton of good to say about the market.  I am sure with producers in the fields doing work we could see the cash market stay firmer as we move forward but the charts don't show me anything to get excited about.  I will continue to stay short with my call strategy in place to give me upside potential if I am wrong.  Based on my cycle indicator I see weakness into May 4th.  

Bottom line: I’m looking for the market to be lower tonight/tomorrow and experience an early low and a late high and I'm staying hedged for now.  If we close below $72.175 tomorrow and Wednesday then I am looking for a test of $70.525.

June '09 Hogs - Support/Resistance for 04-21-09
(R3) Resistance 3: $73.20
(R2) Resistance 2: $72.95
(R1) Resistance 1: $72.725
Today's close: $72.30
(S1) Support 1: $71.95
(S2) Support 2: $71.675
(S3) Support 3: $72.00


 NW_LS500 Des Moines, IA     Mon, Apr 20, 2009     USDA Market News  USDA NATIONAL CARLOT PORK REPORT as of:  3:00 P.M. Purchases equated to FOB Omaha Basis.  Compared to Friday's Close:         Fresh bone-in loins mostly weak; butts mostly 1.00 higher; processor cuts not tested; lean trimmings steady. Trading slow to moderate, with light to moderate demand and mostly moderate offerings.    ----------------------------------------------------------------- Loads PORK CUTS          :              85.5 Loads TRIM/PROCESS PORK  :               9.0 -----------------------------------------------------------------  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 ----------------------------------------------------------------------- 04/20        94.5      60.71   75.23   71.00  36.17 105.40 45.67  77.19 Change :               -0.17    2.91    0.96  -0.63  -0.42 -3.71    unc -----------------------------------------------------------------------
 NW_LS831 Des Moines, IA     Mon, Apr 20, 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 :   .70 hgr   :   .21 hgr   :   .57 hgr   :  1.28 hgr Negotiated      :             :             :             : CARCASS BASIS   : 48.25-62.16 : 49.50-62.16 : 49.50-62.16 : 48.25-62.00 185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg Plant Delivered :    59.00    :    59.38    :    59.77    :    57.93 -------------------------------------------------------------------------- Head Count      :   27,381    :    9,879    :   15,390    :   11,547 ========================================================================== 

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