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Corn – March ‘11 had a whopper of a day today as we managed to have a bearish (negative price) key reversal. What does this mean in today’s market place?? Not much. I don’t put a lot of stock in the typical or "normal" signals that the market gives us because of the different needs for the diverse group of hedger/investors in the market. It looks to me like we should see support around $6.20-6.30 for now. As I wrote last week, I said the market usually tests the January report day high at some point after the January report release. $6.37 was our high on report day and today’s low was $6.37 1/4, pretty close.
The volume was good this afternoon but again which grabs my attention but I still believe there is enough demand for futures contracts from both a investment prospective as well as an input for consumers who are still making money a lot of areas even with corn at current prices. Today and tomorrow we are at the Minnesota Pork Show in the Minneapolis Convention Center. The crowd is steady and guys seem to be optimistic about there future but they know times have changed and risk has increased. If you are able to make it to the show I would suggest you come and check it out, say hello!
The U.S. Dollar Index is still in trouble as it continues to decline in not so formal fashion. We have now come to into a critical area for the dollar and we need to get back above 78.77 as of Friday’s close otherwise we could look for more downside toward the 75.63 area. The 2008 low was around 70.00 which would be our next level of support below 75.63.
All I have to say is continue to look at profitability as far out as you can and don’t worry about where the price of corn is for the time being. If the crush works then corn is cheap enough! Work with your risk manager to take advantage of profits if you have them, obviously every operator is different.
Bottom line – The intraday charts suggest an early low and late high for tomorrows trade.
Meal – March ‘11 meal as well as soybeans held their own today considering the massive decline in corn. I’m still looking for meal to back off to some degree but like with everything else I wouldn’t expect it to be for long. March ‘11 meal has been struggling to move higher over the past week but it has also struggled to move lower. As I mentioned before, I would think any significant dip will be bought as today demonstrated. This thing can go anywhere so make business decisions and know what your risk is, analyze your profits first then make a marketing decision.
Check your crush and if your crush is profitable then meal is "cheap" enough! Make sure that you visit with your risk manager to protect upside price potential with a know risk strategy ESPECIALLY if you have hogs hedged!
Bottom line – The intraday charts suggest meal makes an early low tomorrow.
Hogs – Feb ‘11 hogs opened the day looking firm but sold off around noon. It seems to me like we may have seen the top in Feb hogs. As I said last week the 2010 cutout toppedduring this time-frame and then sold off into February. With that in mind and based on the way the chart looks, I am leaning toward a high having been made in the Feb ‘11 contract. This isn’t a recommendation of any kind it is just my opinion. Continue to analyze your bottom line and if you have profits and you know where the profitability is historically then take a look at protecting it. If you don’t have a risk manager now would be a great time to start sniffing! If you are able to spend your own time managing risk then you have it covered but the risks continue to grow each day as the markets become more volatile.
I’m friendly hogs for the summer into the 4th quarter of 2011 but I can’t guarantee that any of that will be the case by the time we get there. We do watch the crush margins for these time-frames and know that there are opportunities out there (depending on your operation of course) for some guys. I’ve said it before and I will say it again, don’t make business decisions based on what some yahoo on the internet suggest or predicts. Nobody knows. Find someone you trust and work with them to do what is right from a business perspective. It is okay to have an opinion but don’t bet the farm on it.
Again, if you are at the Minnesota Pork Show stop buy and say hello, we are in booth 504.
Bottom line – The intraday charts suggest hogs make an early high tomorrow.
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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.