Hog & Corn Comments – 10/28/09 Selling in feed grain slows, hogs up
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CORN – Dec ‘09 Electronic
Open – $3.71 1/2, High – $3.75, Low – $3.63 3/4, Close – $3.69 Down $.01 3/4
Thoughts – Long Term (into December ‘09) – Sideway/Lower
Dec ‘09: Dec ‘09 found some support today around the $3.65 area which we touched very early in the day. The market seemed heavy all day but managed to rally some going into the close. As of today I have a buy signal on corn at $3.70 stop and if this order is filled there should be a risk management sell stop at $3.61 stop. I'm not sold on the idea of this buy signal but we've had three good down days in the market and we are due for a breather and a small bounce. If we bounce we could get as high as $3.88 3/4 before running into some good resistance.
We currently have a synthetic put in place because we purchased our short $4.00 calls back today at $.06 to take them off the table for now and see how this signal materializes. It also un-caps our upside should the forecast change once again. I'm looking for a bounce in the corn market but a bounce that should be sold at higher prices UNLESS the forecast changes to wetter and indeed does stop harvest but if the forecast is dry then bounces are to be sold.
I said yesterday that we could test $3.57 1/2 but I think today may have been that test even though we didn't get that low.
Bottom line: I am looking for the market to experience an early low tomorrow.
Dec ‘09 Corn – Support/Resistance for 10-29-09
(R3) Resistance 3: $3.91 3/4
(R2) Resistance 2: $3.80 1/2
(R1) Resistance 1: $3.74 3/4
Today’s close: $3.69
(S1) Support 1: $3.63 1/2
(S2) Support 2: $3.58
(S3) Support 3: $3.46 3/4
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MEAL – Dec ‘09 Electronic
Open – $288.10, High – $291.40, Low – $285.00, Close – $291.30 Up $3.70
Thoughts – Long Term (into November ‘09) – Sideways/Lower
Dec ‘09 meal: Meal showed up this morning with a buy signal at $288.00 so we purchased meal futures for now and are trailing with a tight stop order to exit if we are wrong. We are getting back into our long position that we exited on Monday at $298.00 but the overall market still looks weak therefore we will have this stop in place to manage risk. The signal for meal today was good and had a good close which leads me to believe we should see some follow through buying tomorrow before we find resistance at $297.00 and then up at $299.80. Weather will be key in the direction of meal as it will be with corn but for now it feels like we have done enough to the downside for the time being, however, I don't expect any fireworks to the upside either
Bottom line: I’m looking for the market to experience an early low and late high tomorrow.
Dec ‘09 Meal – Support/Resistance for 10-29-09
(R3) Resistance 3: $302.00
(R2) Resistance 2: $295.60
(R1) Resistance 1: $293.50
Today’s close: $291.30
(S1) Support 1: $287.00
(S2) Support 2: $282.80
(S3) Support 3: $276.40
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HOGS – Dec ‘09 GLOBEX
Open – $55.55, High – $55.825, Low – $54.65, Close – $55.95 Up $.525
Thoughts – Long Term (into December) – Negative
Dec ‘09 hogs: Dec hogs opened the day around $.60 lower but failed to do much to the downside and then turned and moved higher later in the day. I was looking for an early high in the Dec '09 contract today but that didn't happen as we rallied into the close. Today's action left us with a warning sign if you are long the market however it isn't a sell signal; it is just a warning to be on the lookout for negative signs. The index fund buying that was supposed to take place this month should be drying up by Friday and then we will see if this market holds its gains.
Broken record statement, I've yet to see anything that creates major excitement on the fundamental side as packers are not aggressively bidding for hogs and there seems to be ample supply out in the countryside. We still have a synthetic put in place at $52.00 basis the Dec '09 contract and will continue to hold this position until we see reason to do otherwise. This is the second day that we've closed above $54.95 so it looks like $59.10 is a possibility now but it will be interesting to see if we can hold gains after the known index fund buying dries up in October.
Technical picture points higher but I wonder if it is skewed because of the un-biased buying of funds as inflationary hedges. I've spoke of the U.S. Dollar Index trying to find a bottom in here and so far it has as it is stronger again today. If this keeps up we should see the buying in commodities subside and if the Dollar really gets moving higher we could see some liquidation as well. For now the technical picture is friendly up to $59.10 and I will keep this attitude for now (even though I don't like it because fundamentals don't add up).
Bottom line: I’m looking for the market to be sideways to lower tomorrow.
Dec ‘09 Hogs – Support/Resistance for 10-29-09
(R3) Resistance 3: $58.25
(R2) Resistance 2: $56.875
(R1) Resistance 1: $56.40
Today’s close: $55.95
(S1) Support 1: $55.00
(S2) Support 2: $55.175
(S3) Support 3: $52.95
(S4) Support 4: N/A
(S5) Support 5: N/A
(S6) Support 5: N/A
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