Hog & Corn Comments - 10-30-08 - Grains take a breath as hogs choke.

Published on: 16:14PM Oct 30, 2008

Hog Comments - 10-30-08 - Grains take a breath as hogs choke.

Jeremy Knutson
[email protected]

Due to time restrictions I am writing my comments prior to the close of the Dow Jones which may affect the accuracy of my comments.


Dec '08 corn opened at $4.16 this morning, rallied to $4.17 and then fell apart.  I said yesterday that I thought we would have a neutral to lower opening last night and then find follow through buying from yesterday's close.  That is exactly what happened, we had a quiet open and then rallied through my resistance number of $4.27 3/4 and got to $4.33 for last night's high.  The other number of $4.11 1/2 found some support early today but then gave way to the selling and the market dropped to $4.02 1/4 before bouncing prior to the close.

Dec '08 corn still has some downside left in it tonight and MAYBE early tomorrow.  I expect corn to open slightly better tonight and then sell off after a small very small rally.  I am not bearish corn at this level just yet, I think we are correcting from our recent gains however we haven't done anything to change the trend from down to up so keep that in mind as well.

Bottom line - I expect a better opening tonight and a small bounce only to be met with selling around $4.17 if the market even gets that high.  I would say we have a chance to test our low of $4.02 1/4 tonight and then tomorrow I expect early lows for the session and late highs.  The market also left a gap at $4.20 that we should fill in the near future as well, maybe even late in the session tomorrow.


Dec '08 meal made a high of $288.90 last night which is just above the $286.80 I talked about in my comments from yesterday.  It looks like Dec '08 meal should open better tonight and find some minor buying and then hit resistance again around today's high of $284.10 to $285.50.  The meal complex was the strongest commodity in the Ag markets today as the Dec contract closed $.30 higher on the day.

Bottom line - I expect the Dec '08 contract to be higher tonight and should find some resistance and then probably trade lower for most of the evening.  I think we may see early lows during the day session tomorrow though.  Last week's high was $277.90 and if Dec '08 meal closes above this level tomorrow it would be viewed as positive and I would look for more follow through buying next week.


Dec '08 hogs did what I thought today which was trade lower considering the cutout number being down so much last night; I guess it doesn't take a rocket scientist to figure that out though!  The market was weak all day but was surprisingly firm in the back end months such as April '09 which only closed $.47 lower compared to the $1.57 lower close by the Dec '08 contract.

I am still not friendly the Dec '08 contract, I still think we could test our contract low of $55.45 tomorrow.  The contract low is only $.55 below our close today and is well within reach for tomorrow's trade.  

Bottom line - I expect Dec '08 hogs to be weak again tomorrow and I expect a test of the $55.45 area at some point in the day.  The US Dollar traded just below unchanged all day and wasn't much of an issue in today's markets.  I also think we will have an early low in the Dec '08 contract tomorrow and see some short covering going into the close and into the weekend.

 The cutout number is not included today because I am posting prior to its release.


 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 :  1.43 lwr   :  1.40 lwr   :  1.18 lwr   :   .38 lwr Negotiated      :             :             :             : CARCASS BASIS   : 49.25-57.70 : 52.00-57.70 : 49.25-57.70 : 50.00-55.41 185 lb Base Hog :   wtd avg   :   wtd avg   :   wtd avg   :   wtd avg Plant Delivered :    54.85    :    55.91    :    56.13    :    52.95 -------------------------------------------------------------------------- Head Count      :   21,934    :    8,883    :   13,172    :    8,582 ========================================================================== 



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.