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Corn – Sep ‘10 made an early run higher this morning but then dropped off as the day progressed. We tested and traded through the $3.76 1/2 number I’ve spoke of recently but failed to close above it today. This is the first test of the $3.76 1/2 resistance area and it usually the first test is faded by the market and then you “go with” the second test, meaning it should follow through higher. The hourly charts suggest that we have a small pull back in the corn market but nothing of any significance.
The daily chart still looks higher into about the 17th of July and then we could take a little longer breather from the move higher. The weekly chart had a powerful buy signal last week and will be confirmed this week if Friday’s close is above $3.44. Unless we have a catastrophic event of some sort, it looks like we should close above said level.
Talk with your risk manager about ways to protect yourself from higher prices in corn!
Bottom line – The intraday charts suggest corn makes an early low tomorrow. Now is a good time to work with your risk manager to help develop a coverage strategy that fits your operation.
Meal – Aug ‘10 meal traded just above the most recent high of $290.30 but failed to close near the resistance point. Not much has changed for me in the way of soybean meal as the cycles look as if we should trade sideways to lower between now and July 30th. Today was our second close above the $282.20 resistance level which could open the door to $293.90 before we get a nice break in price.
Now is a good time to look at protecting any profits you have in your crush margin. I still prefer a known risk strategy with some purchases to mix up the coverage some. Visit with your risk manager to develop a plan that is right for you.
Bottom line – The intraday charts suggest meal makes an early low tomorrow.
Hogs – Aug ‘10 hogs were pretty quiet today considering what happened last Friday. The cycles show us moving higher into July 17th but price action isn’t making a very good case for that argument. Today’s action was actually a warning sign that the market could be looking for a short-term bottom in this area. I still believe we should see the market bounce higher over the coming weeks and give producers a good chance to get some nice hedges in place to protect profits. The U.S. Dollar Index continues to weaken which in due time should bring some strength back to export demand.
Corn and meal have rallied but hogs have failed to rally along with the feed therefore cutting into some of the nice margins that were available just over a week ago. Keep making the business decisions and lock in good profits when you can and continue to rebuild as much equity as possible. Even though it would be great to smack a bases loaded home run with super high prices, it may be in your best interest to take some singles and the occasional double and win in the end.
I would be in talks with my risk manager to develop a sales plan if you don’t already have one to take advantage of any market rallies we may encounter. Keep making business decisions and protect profits where you can.
Bottom line – The intraday charts suggest hogs make an early low tomorrow.
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