If you have trouble viewing this page please visit the market commentary section of www.leanhog.net
Corn – didn’t know which way to go today as we traded marginally higher for most of the day. Today the USDA released its first weekly crop planting progress report this afternoon with no major surprises. The corn crop is 3% planted vs. 2% last year and 4% on a five year average. Because we DIDN’T close below $$3.43 1/2 last Friday I’m still of the opinion that the May ‘10 corn market has done enough to the downside for now.
The planting weather looks rather benign for the next couple of weeks according to the long range forecast for most of the corn belt. We all know of fast forecasts can change but for now it looks non-threatening to spring planting progress.
My cycle indicator is still pointing higher for the balance of April and I would agree with it but again I think any reasonable rally could be met with good producer and professional selling. Tomorrow I’m looking for the market to make an early low and trade sideways to higher tomorrow.
Bottom line – The intraday charts suggest corn makes an early low tomorrow. Now is a good time to buy call options on corn and buy cash hand to mouth until fundamentals change.
Meal – I’m still of the opinion that the meal market will remain on solid footing till the end of April before we find a short-term top. Today’s action was friendly as we closed above last week’s high in the May ‘10 contract and we continue to hold $260.00 as support. Based on the way the market is acting it looks as if the May ‘10 contract may want to test the most recent high of $283.10 again in the near future. I think this will be a target prior to the end of April.
Currently it looks as though the May ‘10 contract should continue to have a positive week (with some fluctuation of course) as it gravitates toward the probable target of $283.10.
Profits remain strong so it never hurts to buy calls to make sure you have a cap on your feed costs, I would suggest taking a look at calls for both corn and meal so you know what your ceiling is for feed costs.
Bottom line – The intraday charts suggest meal makes an early low tomorrow.
Hogs – Friday the June ‘10 hog contract had an ugly close as we barely held on to the gains for the week. The weekly range was $2.025 but the market managed to keep $.50 of it in tact for the weekly gain. The action last week has left the weekly chart looking like we had a spike high and a reversal to the downside is beginning. If the market is indeed going to make a correction to the downside it will need to close two consecutive days below $83.875 to kick in additional selling.
The comments in blue are from last Thursday the 8th’s post but I thought it is relevant to leave it in this post.
Gaps are usually technical targets at some point but the ones left recently are a ways below the market the market and I don’t think we will fill the first gap at $79.775 but I do think the second gap at $81.025 has a chance to fill because it is at the same level as a 62% retracement back to our most recent low of $78.075.
I’m not friendly June hog futures right now and it is possible I may be alone in that camp but it’s what the charts tell me based on the information I look at. The only way I become bullish June hogs is if we get a strong weekly close above $86.00 either tomorrow or next Friday. If we don’t get a strong close above $86.00 then I’m looking for a correction back to $81.975 and $81.05 before we find good support.
Cutout continues to move higher but volume of loads is lacking. We only had 22 loads today and not many at the end of last week either. I am VERY skeptical of this market right now, however, a potential buy signal popped up today at $84.00 on a stop. This signal is good for tomorrow only so I will watch it and update you in tomorrow’s commentary. I’m still leaning toward the negative side of the equation and thinking this signal will end up being a false signal.
At MINIMUM put options or a known risk strategy should be used to protect profits as well as protect against any events that have the possibility of popping up like H1N1 proved to us last year.
Bottom line – The intraday charts suggest hogs make an early low tomorrow.
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.