CORN – July ‘09 Electronic
Open – $3.83 3/4, High – $3.84, Low – $3.70, Close – $3.80 3/4 Down $.05.
Thoughts – Long Term (6 months) – Bullish/Higher
Thursday I said: “We managed to get our close above $3.76 today but I don’t think there is much left in the tank for corn to keep rallying. I need to see tomorrow close above $3.76 as well to make sure today wasn’t a fluke which I believe it was. There wasn’t much volume today; if this bounce is based on planting fears then I believe you sell into this rally. I am still friendly longer-term but I believe we should make another run at $3.65-$3.67 before we move higher. I think a good day trade would have been selling the close today or anything above $3.82 tonight and have a buy stop at $3.88; this thought is an observation only, not a recommendation. ”
July ‘09 corn: It was all about the Swine Flu today and the negative press that comes with it. It is interesting to see human emotion take hold and panic which is what we saw last night and early this morning in the corn market. I said in my last post I was looking for $3.65-.67 to be tested again before we go higher (May ’09 contract) and today our low during the day session was $3.66 and we never looked back. I have switched my focus from May ’09 to July ’09 because of the pending May expiration. I think this pull back is an excellent opportunity to further cover feed needs as I purchased a June ’09 $3.80 call and sold a July ’09 put today for $.08. There is good support in this area and this is the second time we have made a move lower like this only to come charging right back. We have a small double bottom for this move at $3.70 in the July ’09 contract and I fully expect it to hold as our low unless we get a massive outbreak of the Swine Flu that actually requires killing pigs however I don’t see it happening.
Bottom line: I am looking for the market to experience an early low and a late high tomorrow. Now that I have all my feed needs covered via $3.80 June ’09 call options to the upside I will look for opportunities to manage any potential equity we acquire and look for a place to exit our short $3.40 July ’09 puts on a rally.
July ‘09 Corn – Support/Resistance for 04-28-09
(R3) Resistance 3: $3.95
(R2) Resistance 2: $3.85 1/2
(R1) Resistance 1: $3.84
Today’s close: $3.80 3/4
(S1) Support 1: $3.78 1/4
(S2) Support 2: $3.75
(S3) Support 3: $3.70
MEAL – July ‘09 Electronic
Open – $306.30, High – $315.80, Low – $300.60, Close – $306.30 Down $12.00
Thoughts – Long Term (6 months) – Bullish/Higher
Thursday I said: “I see the high on May ‘09 meal show’s $340.00 but I didn’t see it touch there during the day and if I look at a one minute chart it says it did it in the first minute of trade. The R3 number from yesterday was $341.00 so it is possible $340.00 was our high today, I just didn’t see it. If $340.00 was our high and not a bad tick ($340 is the high on CME.com) then I am not friendly soybean meal at all. This would have been an awful close for the day. I expect selling on stop orders below today’s low of $324.40.”
July ‘09 meal: Like corn meal was a victim to the panic selling related to the Swine Flu. As mentioned above I wasn’t friendly meal at the end of last week at all and I expect a possible test of $296.60 in the July ’09 contract. Just to make note I have switched my focus from May ’09 meal to July ’09 meal due to the contract expiration in the May contract. I am looking for some more early selling in soybeans and then I think we can put a fork in for the day as I believe we will have traded enough contracts to get through all of the emotion that has come with the Swine Flu. I have a cycle low on in July ’09 meal around May 18th so I am in no hurry to buy meal although I did let May ’09 $320.00 call options turn into long futures Friday and I still have the position for now. It is on around 55% of my needs but I will monitor this position closely.
Bottom line: I’m looking for the market to experience an early low tonight and a late high tomorrow.
May ‘09 Meal – Support/Resistance for 04-28-09
(R3) Resistance 3: $316.80
(R2) Resistance 2: $313.20
(R1) Resistance 1: $310.80
Today’s close: $306.30
(S1) Support 1: $305.70
(S2) Support 2: $300.60
(S3) Support 3: $298.10
HOGS – June ‘09 GLOBEX
Open – $68.825, High – $68.95, Low – $68.65, Close – $68.65 Down $3.00-LIMIT
Thoughts – Long Term (6 months) – Friendly
Thursday I said: “June ‘09 futures found support at my S2 number from yesterday of $71.35 but just couldn’t muster enough momentum to reach my targeted area of $70.525. I still believe we will test $70.525 at some point in the next week or so and if we do I will be looking to adjust my position to allow for more upside potential if the market decides to move higher. For now I will remain hedged but the market is seeing buyers come into the market on these breaks. We need to get back above $72.175 tomorrow if we want to try and rule out a test of $70.525.”
June ‘09 hogs: Synthetically the June ’09 hog futures were trading $3.65 lower on the day when factoring in options. The limit for the day is only $3.00/cwt in the futures but option could still trade and when you factor in what they did it suggests the June was actually down $3.65/cwt instead of $3.00 like the futures showed. This is actually a good sign for tomorrow as far as I’m concerned. The opening today (from a weekly perspective) was bullish based on what I look at on the charts. If the June ’09 contract can manage to reverse and move higher we could be setting a bottom. Now, I didn’t say go buy the market but I would look to trail hedges with a buy stop at $69.20 or purchase a call option against hedges to protect equity if you have any.
I have talked about events before and this is one too only on a larger scale. With events comes emotion but when you put all of the information down on paper this is just a temporary setback in the futures because Swine Flu IS NOT spread by eating pork. I am impressed with the Government as they have tried to make it very clear that you cannot get sick from eating properly handled and well cooked pork. I am looking for tomorrow to have a some more follow through selling and if we gap open lower and then turn around and trade higher on the day there will be a buy signal at $68.90 stop with a risk management sell stop $.25 below the current low at the time you get your fill.
The one wild card here is the media, they can report however they like and I would imagine there will be a fair amount of fear/panic based headlines which may extend the selling in hogs. I for one don’t believe the selling will last much longer in the hog pit; there really is no reason to at this point. I will be restructuring my hedges tomorrow to be in a more bullish position while still having coverage in place to the downside. I want to protect the equity that was gained today as best we can.
Bottom line: I’m looking for the market to be lower tonight/tomorrow and experience an early low and a late high.
June ‘09 Hogs – Support/Resistance for 04-28-09
(R3) Resistance 3: $70.75
(R2) Resistance 2: $70.25
(R1) Resistance 1: $69.70
Today’s close: $68.65
(S1) Support 1: New Contract Lows
(S2) Support 2: $
(S3) Support 3: $
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