Hog & Corn Comments - 11/30/09 The buying continues in grain
Nov 30, 2009
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CORN – Mar ‘10 Electronic
Open – $4.12, High – $4.20 1/4, Low – $4.07 1/4, Close – $4.17 1/2 Up $.04
Thoughts – Long Term (into February) – Sideways
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Mar ‘10: The corn market was relatively indecisive today as we traded both sides of unchanged. The outside markets are still trying to assess the damage if any from the Dubai debt issues so the Dow Jones was under pressure for most of the trading session and the dollar held steady around unchanged. The March '10 corn contract currently has a double top in place at $4.25 so with that in mind I want to stay neutral in positions until the market makes two consecutive closes above the $4.25 level.
The reason we need to pay attention to the affects of the Dubai issue is because investors may seek to buy the dollar as a "flight to safety" trade. If this is the case then we could see pressure on the commodities markets as traders could unwind some of the long commodities due to a weak dollar trade. Thus far the Dubai issue has been just news and if you listen to some of the financial news channels out there you will probably find as many bulls and you will bears when it comes to the stock market so only time will tell with this one.
The European banks have much more exposure to this potential problem compared to the United States. Today a strategist on CNBC estimated the debt that is being considered at risk from a United States standpoint is $10 billion where AIG was around $180 billion in an attempt to quantify the potential issue.
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 that is why I think the Dubai news is worth paying attention to.
Bottom line: I am looking for the market to experience an early low tomorrow.
Mar ‘10 Corn – Support/Resistance for 12-01-09
(R3) Resistance 3: $4.41
(R2) Resistance 2: $4.28
(R1) Resistance 1: $4.22 3/4
Today’s close: $4.17 1/2
(S1) Support 1: $4.15
(S2) Support 2: $4.09 3/4
(S3) Support 3: $3.89
MEAL – Jan '10 Electronic
Open – $314.20, High – $318.50, Low – $312.50, Close – $315.20 Up $.70
Thoughts – Long Term (into February '10) – Sideways
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Jan ‘10 meal: Meal has moved higher as a benefactor of fund buying but the million dollar question is will it continue. There is some resistance at $316.70 in the Jan '10 contract and if we get two consecutive closes above this level we could see additional upside. The next target would be $336.00 but again we need to see the market close above $316.70 a couple of times first. I have been saying for awhile that 74.94 was a key level of support in the Dollar and it continues to hold.
The market traded below 74.94 for the last four weeks, this week included but it has always closed above 74.94 for the week. Again, for me the dollar is searching for a bottom in this area if it can't close two consecutive weeks below 74.94. If traders end up buying the dollar as a "flight to safety" trade then this could be what the market needs to provide a short-term bottom for the dollar.
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 high on tomorrow.
Jan ‘10 Meal – Support/Resistance for 12-01-09
(R3) Resistance 3: $327.40
(R2) Resistance 2: $321.40
(R1) Resistance 1: $318.30
Today’s close: $315.20
(S1) Support 1: $312.30
(S2) Support 2: $309.40
(S3) Support 3: $303.40
HOGS – Feb ‘10 GLOBEX
Open – $67.55, High – $67.70, Low – $66.35, Close – $66.875 Down $.45
Thoughts – Long Term (into February) – Neutral
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Feb ‘10 hogs: The Feb '10 contract sold off today in conjunction with weaker cash bids. I had a cycle high projection for November 23rd in the Feb '10 contract but the market has rallied nearly another $2.00 cwt from that point. The market has been overbought on the daily chart for several days now and is due for a correction back toward the $64.525 area in the Feb '10 contract. Again like all of the commodities we are at the mercy of the dollar, if it goes lower the hogs go higher and if the dollar moves higher we could see hogs move lower.
There is news of a mutated strain of the H1N1 flu in several countries around the world, the United States included. It has been both milder and worse than the 2009 H1N1 strain so not much is known about this mutated variety at this time but the World Health Organization is monitoring it. The Feb '10 contract has a nice uptrend going since the August low but there are some indicators pointing to a retracement lower.
$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 12-01-09
(R3) Resistance 3: $69.675
(R2) Resistance 2: $68.325
(R1) Resistance 1: $67.60
Today’s close: $66.875
(S1) Support 1: $66.25
(S2) Support 2: $65.625
(S3) Support 3: $64.275
(S4) Support 4: N/A
(S5) Support 5: N/A
(S6) Support 5: N/A
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