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CORN – Dec ‘09 Electronic
Open – $3.34, High – $3.40 3/4, Low – $3.29, Close – $3.38 1/2 Up $.04 3/4
Thoughts – Long Term (into December ‘09) – Sideways
09/15/09 I said: “Well everyone decided to get excited about frost all at once today! The Dec ’09 contract was only 3/4 cent higher around 6:30 a.m. CST but by the time it closed it rallied and closed around $.04 3/4 higher with most of the rally coming after 7:00 a.m. It didn’t take long for the market to make a burst higher during the day session as stop orders hit and propelled the price and volume. We were delta hedged against some short $3.20 puts which we purchased our short futures back at $3.27 today and also exited our short $3.20 puts which leaves us with a long $3.20 Oct ’09 call.
The volume was HUGE in the Dec ’09 contract today with all of the stop orders and short-covering. The frost prediction by the GFS weather model is for the Western Corn Belt and is projected to happen around September 25th. The GFS isn’t a very consistent model compared to others and I believe it is more of a short range model vs. projecting weather 10 days out. My point is we can probably expect this model to change and possibly flip flop as we move forward which will create more volatility.
At this point we will continue to hold a know risk call option for upside protection in the event that this frost is for real which could send the market even higher. The market will probably trade with the forecasts for the next week so be prepared to get thrown around. Funds were net buyers of over 20,000 contracts today.”
Dec ‘09: The Dec ’09 corn contract is still looking for a solid direction to trade. The rumor last week was a fund or funds were going to start allocating some money to corn therefore many were trying to front run the rumored fund buying that will supposedly start in October. We are maintaining upside coverage in corn because we have hedges in place for hogs. We do have the downside open which allows us to capture lower prices if the crop size continues to grow.
Fundamentally the corn crop seems as if it will be huge but we haven’t gotten enough harvest information to prove it. The early yield reports are pointing to a very large crop.
Bottom line: I am looking for the market to experience an early high tomorrow.
Dec ‘09 Corn – Support/Resistance for 09-29-09
(R3) Resistance 3: $3.59 3/4
(R2) Resistance 2: $3.47 3/4
(R1) Resistance 1: $3.43 1/4
Today’s close: $3.38 3/4
(S1) Support 1: $3.31 1/2
(S2) Support 2: $3.24 1/2
(S3) Support 3: $3.12 3/4
MEAL – Dec ‘09 Electronic
Open – $283.50, High – $286.50, Low – $279.20, Close – $284.50 Up $.60
Thoughts – Long Term (into November ‘09) – Sideways/Higher
09/15/09 I said: “It didn’t take long for meal to rebound as it had a strong move higher along with all of the other grains. I purchased October meal today around $296.00 and will hold it for now as we look for a reason to continue to hold it or to sell it. The weather forecast took the trade by storm today causing corn to rally which brought soybeans and meal along for the ride as well. I thought the $281.50 area was going to hold support and today’s move leaves the chart looking pretty good. I have a cycle indicator that says we should begin moving higher until approximately October 3rd.
It looks like we should see some additional follow through buying tonight and early tomorrow but all of the gains in meal and corn depend on the forecasts. If the forecasts get warmer then we could see this rally go away, we are truly in a crap shoot for now.”
Dec ‘09 meal: Not much has changed in the meal market I am still looking for higher prices for now as the old lows have held support. The same thought applies to meal as we hold long positions because we are short hogs. At this point the downside isn’t open but will monitor our position closely to look for signs downside reversal. We are currently up against some resistance at $285.50 in the Dec ’09 contract. If the market wants to continue higher we will need to closes above $285.50 in the coming days to keep the technicals pointing higher.
Keep upside coverage in place with a known risk strategy if you don’t have it already because the weekly chart still shows the potential for a breakout to the upside.
Bottom line: I’m looking for the market to experience an early high and late low tomorrow.
Dec ‘09 Meal – Support/Resistance for 09-29-09
(R3) Resistance 3: $298.00
(R2) Resistance 2: $290.70
(R1) Resistance 1: $287.60
Today’s close: $284.50
(S1) Support 1: $280.30
(S2) Support 2: $276.10
(S3) Support 3: $268.80
HOGS – Dec ‘09 GLOBEX
Open – $49.15, High – $50.45, Low – $49.15, Close – $49.725 Up $.70
Thoughts – Long Term (into December) – Negative
09/15/09 I said: “When I wrote “I would think we should see some early speculator money come into the market based off of the cutout being $2.59 higher tonight but I don’t think it will last nor do I think we will have a runaway market to the upside tomorrow.” yesterday I thought to myself this is just tempting the market gods and sure enough, boom! The thoughts of higher cutout tonight along with product interest from Russia sparked the market.
I was looking for an early low with the market strengthening as the day progressed but I DID NOT expect the Dec ’09 to touch limit up. The interesting thing to me is the commodity funds are shown as record short 31,000 contracts of hogs in the last CFTC report and the Index funds are long 67,000. I was of the opinion that we were/are in for one more stab at contract lows in the Dec ’09 contract but this price action is making me wonder. My cycle indicator is showing a cycle high between now and Friday for the Dec ’09 contract and then trade lower into the end of September.
We continue to be hedged in the Dec ’09 contract with upside up to $58.00 and we will keep this position in place until we can nail down more concrete evidence that the market is turning but for now I would use this opportunity to enter into limited risk strategies if you need hedges in place.”
Dec ‘09 hogs: Broken record time, not much has changed since my last post. We had the Quarterly Hog & Pig report last Friday which showed little in the way of herd reduction therefore not painting a bullish picture overall for the long-term. Now, these are futures markets and things change so this doesn’t mean we are at our highs for the next 12 months in the summer months, it just means we still need to reduce our supply.
As mentioned earlier we had a cycle high in the Dec ’09 contract between the 16th and 18th of September which is exactly when the most current high occurred. I still believe this is a good opportunity to get know risk strategies in place for hogs being hedged in the Dec ’09 contract or even for hogs delivered later than Dec ’09. Today’s close wasn’t impressive on the daily chart and signals more downside and a conditional sell signal at $50.20 STOP. The conditions for this sell signal is the Dec ’09 contract NEEDS to trade above $50.50 before the $50.20 sell STOP signal is generated. If the signal is generated then a risk management protective buy stop would be placed $.50 above the most current intra-day high.
Bottom line: I’m looking for the market to make an early high tomorrow.
Dec ‘09 Hogs – Support/Resistance for 09-29-09
(R3) Resistance 3: $52.375
(R2) Resistance 2: $51.075
(R1) Resistance 1: $50.40
Today’s close: $49.725
(S1) Support 1: $49.10
(S2) Support 2: $48.475
(S3) Support 3: $47.175
(S4) Support 4: N/A
(S5) Support 5: N/A
(S6) Support 5: N/A
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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.