Corn – Dec ’11 corn finally had some volume trade today and managed to close above the $6.55 1/2 level that has been so difficult to get above. I’m of the opinion that the market wants to break out above the $6.65 1/2 area and travel up toward the $7.00 area. All bets are off with tomorrow’s Monthly USDA Crop Production report.
The market has been trading sideway’s to higher since the middle of October with inability to close above $6.55 1/2. We had that close today which leads me to believe that tomorrow’s report will bring us bullish information.
Bottom Line – The crop report will trump technicals tomorrow but I expect an early low and a late high.
Meal – Dec ’11 meal continues to hang out here with very little movement. I’m of the opinion that the meal market is poised to move higher but has yet had good reason to do so. Tomorrow’s report could give us the reason that the market has been looking for. $300.00 continues to be support in the Dec ’11 contract and I expect that to hold at this time.
Bottom Line – I’m looking for an early low tomorrow.
Hogs – Feb ’12 hogs finally dropped below the 50% retracement level of $89.80 level that I spoke of last week. The Feb contract doesn’t have any good support below us until we get to the $86.45 area. I expect $86.45 to be test this week and if we can’t hold that level as support then I expect a test down to $85.07. There was good volume at lower prices today in the cash market which hasn’t happened all that much over recent months. I think we are finally getting to some extra hogs and packers have good supply booked leaving little room for producers to negotiate higher sales.
I’m of the opinion that the market continues to move lower for the time being, however, I don’t think we are in a doom and gloom situation as far as hog prices falling and not looking back. I do think the crush margins will see continued pressure from rising feed costs and weaker pork prices. I would expect some reprieve after the first of the year.
Bottom Line – I’m looking for an early high in the Feb ’12 hog contract for tomorrow.
CASH HOG PRICE SHARING NETWORK
We have been using Twitter as a tool to share negotiated cash hog information since April 2011 and it has been working well. We still need more participants to build our network and provide more valuable information to producers that sell open market pigs or are thinking about getting into the negotiated market to some degree.
There is a lot of work to be done in getting more negotiated hogs into the mix of our daily slaughter. Industry experts suggest that we need 10% of the daily slaughter to have fair price discovery and we are currently running below 5% on most days! If there are not enough negotiated pigs in the future then new packer contracts will more than likely be based off of the product and what cutout does. The hog producers would be hurt by a move like this because there would be absolutely no control over their marketing’s. Export business DOES NOT show up in our cutout reports.
If you are interested in what goes out on Twitter just visit www.markethogs.com which will bring you to my twitter page and you can see what is posted. We have producers setup so these messages go directly to their cell phones in the form of a text message to keep producers as up to date as possible on cash news.
Producer hog margins are still very good at the moment but don’t expect them to last forever. If you haven’t made any moves in the market please review your situation and visit with your risk manager about a plan!! If you have been caught in the MF Global debacle and need help with your account and are looking for a place to call home you can give our office a call as we would be glad to help. Our toll-free number is.
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.