CORN – Mar ‘10 Electronic
Open – $4.15 1/4, High – $4.21 1/4, Low – $4.12, Close – $4.14 1/2 Down $.03
Thoughts – Long Term (into February) – Sideways
Mar ‘10: The corn market gave back most of its gains from yesterday with the funds selling around 6,000 contracts today. It is confusing to say the least because the Dow Jones was 100+ higher for most of the session; the dollar was a lot lower and crude was up as well. All of the outside factors suggested corn should have been higher on the day but the end result was a sell off going into the close.
As I mentioned yesterday we still have a double top at the $4.25 level which suggests we should hold out on taking an aggressive approach to owning corn. Today we did buy a Mar '10 $4.20 call, sold a $4.80 call and sold a $3.60 put for $.10 to give us some upside in the event the market does take off through the $4.25 area. The Dubai issues have all but gone away and with the dollar moving lower again today I wanted to have some protection in place if we get a violent move higher. If the market tanks from here we will be long Mar '10 corn at $3.70.
We can look for the markets to become more and more volatile between now and the first of the year as we have to move through the holidays. Nothing has really changed in my opinion, the funds will decide where this market goes and closing lower today was a surprise considering the outside markets would promote higher prices.
Bottom line: I am looking for the market to experience an early low tomorrow.
Mar ‘10 Corn – Support/Resistance for 12-02-09
(R3) Resistance 3: $4.25
(R2) Resistance 2: $4.19 3/4
(R1) Resistance 1: $4.16
Today’s close: $4.14 1/2
(S1) Support 1: $4.10 1/2
(S2) Support 2: $4.06 3/4
(S3) Support 3: $3.97 1/2
MEAL – Jan '10 Electronic
Open – $315.00, High – $319.80, Low – $312.50, Close – $313.40 Down $1.80
Thoughts – Long Term (into February '10) – Sideways
Jan ‘10 meal: Meal traded above the $316.70 level of resistance again today but failed to close above it for the second day in a row. The last two trading days have left me feeling like the Jan '10 meal contract wants to find a top in this area. We could expect sell stops to be triggered below $312.50 in the Jan '10 contract if we trade there tomorrow.
We are still on the sideline in meal and will continue to be for now as we begin to move through the holiday season. As always if there is profit in a group of hogs with corn and meal prices at current levels just lock it in!
Bottom line: I’m looking for the market to experience an early low tomorrow.
Jan ‘10 Meal – Support/Resistance for 12-02-09
(R3) Resistance 3: $322.50
(R2) Resistance 2: $317.90
(R1) Resistance 1: $315.20
Today’s close: $313.40
(S1) Support 1: $310.60
(S2) Support 2: $307.90
(S3) Support 3: $300.60
HOGS – Feb ‘10 GLOBEX
Open – $66.975, High – $67.575, Low – $66.65, Close – $66.95 Up $.075
Thoughts – Long Term (into February) – Neutral
Hog margins are starting to show some good profit for the coming year. If you would like to run a profitability crush for your operation, email us at [email protected]
Feb ‘10 hogs: The Feb '10 contract didn't change much from yesterday as we had a mostly quiet day of trade. The range from low to high was only $.925 which isn't very wide these days. As mentioned yesterday, the market looks like it is at a point where it could take a breather and retrace back toward the $64.525 area based on the indicators I follow. I have no clear cut sell signal but my indicators say we are way overbought and are due to correct.
The fund money is still the key in price direction which is tied to the dollar; it was lower today and helped support the hog futures as the cash market looked sick. The noon cutout report showed some optimism for this afternoon's cutout number but a lot can change between the noon and final report.
$66.55 is an area of support for the Feb contract and if we close above this price on Friday we should target $70.675 in the near future. There is a POTENTIAL sell signal on the weekly chart at $65.00, if Feb '10 closes below $65.00 this Friday that would trigger the sell signal. If the market does NOT settle below $65.00 by this Friday the signal is null and void. This signal is only good if the market gets as low as $65.00, it is not good at current levels.
Bottom line: I’m looking for an early low tomorrow.
Feb ‘10 Hogs – Support/Resistance for 12-02-09
(R3) Resistance 3: $68.90
(R2) Resistance 2: $67.975
(R1) Resistance 1: $67.45
Today’s close: $66.95
(S1) Support 1: $66.55
(S2) Support 2: $66.15
(S3) Support 3: $65.20
(S4) Support 4: N/A
(S5) Support 5: N/A
(S6) Support 5: N/A
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EHedger Livestock Commentary 12/01/09