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Wheat Continues to Offer Bullish Corn Influence

Updated: 03/26/2014 @ 1:52pm

Corn Commentary

It was another day of low volume trade today. That suggests that funds were not present again making this two days in a row they have sat on the sidelines. A lack of fund buying two days in a row should catch the attention of the corn bears as they could begin to gain confidence if Monday shows yet another morning with funds quiet. Once again the cool weather forecasts will likely support the corn but as much as a 20 cent slide could be seen if exports and funds remain quiet until the end of the month. As the end of the month approaches, the December could end up holding better strength than the old crop looking for 3 million fewer acres to be show on the acreage report. Much like the November beans it is possible that December corn could just be finding a trading range between 475 and 490 until the end of the month. Wheat will continue to offer some bullish corn influence but it is important to note that most wheat contracts are about to hit chart resistance. Corn bulls might want to take some profits if exports and funds are quiet to start next week. Bears can look to be sellers but also might want to aim for quick profits until spring weather forecasts improve…Ryan Ettner

Trade Recommendations:

(2/24) Bought July/Sold December corn spread at -2 (2 cents to December), exit on Monday morning’s opening 

Lean Hog Commentary

Smithfield officially announced it was ending Friday kill shifts at its Tar Heel, NC and Gwaltney, VA plants today in reaction to tight hog numbers. This is not new news to the pork industry but it does represent the current supply problem. The month of February was pretty consistent with kill levels about even with last year. Last week was an abrupt transition with its 6.0% lower than last year kill. This week’s run ended 7.8% lower than last year assuming USDA does not make revisions on Monday. The long slow march to miniscule summer hog supplies continues. Last year saw this week’s kill transition from 2.194 million head down to 1.950 million in June. For this year, this week’s 2.024 million kill could turn into 1.755 in June assuming a very conservative 10% year over year drop by summer!!! Though we are throwing out a lot of statistics, here some more. This decline down to 1.755 million is a tightening of 13% from this week. It is not out of line to therefore assume cash hogs will go from $114 now up to $135. That is why we have discussed this price before an an unofficial target for June futures. Yes, potentially that upside price could be too conservative if kill levels widen out to a 15% year over year drop.

Repeating from yesterday’s commentary…this week’s PED update showed the current peak was the week ending February 16 at 314 cases. The week after it was 311 and the latest number, for March 2, was 274. As this is a flu virus expect new findings to being slowing down as warmer weather takes hold. There is a chance this market could slow its ascent as this pscyhological rocket fuel is taken off the fire so to speak. For the short term we cannot make a bearish case…Rich Nelson

Working Trades:

(1/3) Sold 2 Jun 96.00 puts 1.95, risk to 1.97, objective 0. Closed 0.02.

(1/24) Sold 1 Jun 98.00 put 2.02, risk to 2.10, objective 0. Closed 0.15.

(3/11) Sold Jun 114.00 put 2.05, risk to 3.65, objective 0. Closed 1.42.

(3/13) Sold June 118 put 2.35, risk to 3.95, objective 0. Closed 2.25.

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