Value Zone In Crude?

Active fund buying emerged to support the higher
trade early in the session with corn following soybeans higher for fear of the
spread of Asian rust across the Midwest for 2005. Ideas that the harvest lows
are in place and that harvest selling pressures are winding down as well due to
the slower harvest added to the positive tone. With funds holding a hefty net
short position and March corn closing above the 40-day moving average for the
1st time since September 1st, the market looks vulnerable to more short-covering
ahead. Funds were noted buyers of near 4500 contracts into the mid-session. Gulf
basis was firm this morning in spite of some producer selling on the rally as
exporter demand remains firm as well. Weekly export sales, released before the
opening, are expected to come in near 850,000-1.2 million tons as compared with
830,800 tons last week. March corn support comes in at 215 1/4 and 214 with
resistance at 220 1/2 and 223 1/4.

Technical Outlook

CORN (MAR) 11/18/2004: The cross over and close
above the 40-day moving average indicates the longer-term trend has turned up.
Momentum studies are rising from mid-range, which could accelerate a move higher
if resistance levels are penetrated. The market’s close above the 9-day moving
average suggests the short-term trend remains positive. The gap up on the day
session chart gave a bullish indicator and more follow through could be seen
this session. There could be more upside follow through since the market closed
above the 2nd swing resistance. The near-term upside objective is at 220 1/2.
The next area of resistance is around 219 and 220 1/2, while 1st support hits
today at 216 and below there at 214 1/2.

 

SOY COMPLEX RECAP

11/17/2004

January Soybeans finished up 12 1/2 at 553, 2 off
the high and 9 up from the low. March Soybeans closed up 13 1/2 at 558. This was
9 1/2 up from the low and 1 off the high.

January Soymeal closed up 1.4 at 157.8. This was
1.4 up from the low and 1.9 off the high.

January Soybean Oil finished up 0.36 at 21.61,
0.11 off the high and 0.28 up from the low.

Significant uncertainties regarding the spread of
Asian rust across the US has helped trigger another round of active speculative
short-covering and a move to the highest level since September 20th for January
soybeans. Funds were noted buyers of near 8000 contracts in soybeans. The rust
can lower yields for soybeans by near 80% if untreated and the increased cost of
chemicals to combat the disease could trigger a shift away from soybean
plantings for next year. November 2005 soybeans are already up 53 cents off of
the November lows due to the rust news. Speculators were caught holding a record
net short position (as of November 9th) according to the COT report with options
and the move over the October highs trigger more short-covering today. Cash
basis levels have remained steady in spite of the rally as producer selling has
remained light. The 4% surge in palmoil futures to a new 6-week high added to
the positive tone ahead of the opening. Weekly export sales, released before the
opening, are expected to come in near 750,000-1.0 million tons for soybeans,
75,000-125,000 tons for meal and 5,000-10,000 tons for oil. Resistance for
January soybeans comes in at 556 and 561 with support at 548 1/2 and 545.

Technical Outlook

BEANS (JAN) 11/18/2004: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The market’s short-term trend is positive on the close above the
9-day moving average. If yesterday’s gap higher on the day session chart holds,
additional buying could develop this session. The market’s close above the 2nd
swing resistance number is a bullish indication. The next upside objective is
562 1/4. With a reading over 70, the 9-day RSI is approaching overbought levels.
The next area of resistance is around 558 1/2 and 562 1/4, while 1st support
hits today at 547 1/2 and below there at 540 1/4.

MEAL (JAN) 11/18/2004: Positive momentum studies
in the neutral zone will tend to reinforce higher price action. A positive
signal for trend short-term was given on a close over the 9-bar moving average.
Follow through buying looks likely if the market can hold yesterday’s gap on the
day session chart. The market setup is supportive for early gains with the close
over the 1st swing resistance. The near-term upside objective is at 162.4. The
next area of resistance is around 161.0 and 162.4, while 1st support hits today
at 158.0 and below there at 156.4.

BEANOIL (DEC) 11/18/2004: Positive momentum
studies in the neutral zone will tend to reinforce higher price action. The
close above the 9-day moving average is a positive short-term indicator for
trend. The market setup is supportive for early gains with the close over the
1st swing resistance. The next upside objective is 21.95. The next area of
resistance is around 21.80 and 21.95, while 1st support hits today at 21.42 and
below there at 21.18.

 

WHEAT MARKET RECAP

11/17/2004

December Wheat finished up 7 3/4 at 318 1/2, 1/2 off the high
and 4 1/2 up from the low. March Wheat closed up 7 3/4 at 329 3/4. This was 5
3/4 up from the low and 1/4 off the high.

The move to a 3 1/2 week high along with news on
Monday night that fund traders were holding a record net short position as of
November 9th leaves the market vulnerable to more short-covering strength ahead.
March wheat has already gained as much as 22 cents off of Friday’s lows and the
gap of the 40-day moving average today along with the close near the highs are
other supportive technical factors for the market to absorb. The sharp drop in
the US dollar is seen as a bullish export demand factor to keep US wheat
competitive on the world market. Traders await possible export news from Iraq or
Pakistan. Cash basis levels were steady. Weekly export sales, released before
the opening, are expected to come in near 350,000-450,000 tons as compared with
657,100 tons last week. Argentina officials pegged the 2004/2005 wheat
production at 14-15 million tons as compared with last weeks USDA forecast in
the world supply/demand report at 15 million tons. March wheat support comes in
at 326 and 323 1/2 with resistance at 329 3/4 and 334 3/4.

Technical Outlook

WHEAT (MAR) 11/18/2004: The cross over and close
above the 40-day moving average is an indication the longer-term trend has
turned positive. Positive momentum studies in the neutral zone will tend to
reinforce higher price action. The market’s short-term trend is positive on the
close above the 9-day moving average. The gap upmove on the day session chart is
a bullish indicator for trend. There could be more upside follow through since
the market closed above the 2nd swing resistance. The near-term upside target is
at 334 1/4. The next area of resistance is around 332 3/4 and 334 1/4, while 1st
support hits today at 326 3/4 and below there at 322 1/2.

 

LIVE CATTLE RECAP

11/17/2004

December Live Cattle closed up 1.22 at 87.32.
This was 1.27 up from the low and 0.12 off the high.

January Feeder Cattle finished up 0.50 at 103.70,
0.52 off the high and 0.60 up from the low.

February cattle closed above the 40-day moving
average for the first time since October 27th with solid gains led by continued
strong beef prices, muddy feedlot conditions and more rains in the plains.
Boxed-beef prices were up $1.02 to $138.33 at mid-session as compared with
$132.25 one week ago. Slaughter came in at 116,000 head as compared with trade
expectations at 119,000-128,000 head. Traders look for the Cattle-on-Feed report
on Friday to show on-feed supply on November 1st at 102.3% (range 101-103) with
October placements near 96% (range 89-101) and October marketings near 95.5%
(92-98). Support for February cattle comes in at 88.40 with 89.87 as next upside
objective.

Technical Outlook

CATTLE (DEC) 11/18/2004: The cross over and close
above the 40-day moving average is an indication the longer-term trend has
turned positive. Daily stochastics have risen into overbought territory which
will tend to support reversal action if it occurs. The market’s close above the
9-day moving average suggests the short-term trend remains positive. Since the
close was above the 2nd swing resistance number, the market’s posture is bullish
and could see more upside follow-through early in the session. The next upside
target is 88.420. The next area of resistance is around 88.020 and 88.420, while
1st support hits today at 86.620 and below there at 85.650.

 

LEAN HOGS RECAP

11/17/2004

December Lean Hogs closed up 0.45 at 74.82. This
was 0.65 up from the low and 0.60 off the high.

February Pork Bellies finished down 1.00 at
99.65, 1.55 off the high and 0.80 up from the low.

February hogs opened higher and closed 42 lower
on the session with more active speculative selling noted on follow-through from
the sweeping reversal on Tuesday. Firm cash markets and more strength in the
pork product markets last night helped to support the December futures and bull
spreading but the reversal attracted technical selling after the higher opening.
Packer demand remains strong but there is some concern that the surge in pork
production this week could begin to pressure pork product prices next week.
Slaughter came in at 405,000 head today which could be an all-time record high
as compared with trade expectations at 398,000-402,000 head. Slaughter has
reached 1.213 million head this week as compared with 1.161 million last week
and 1.175 million head last year at this time. The CME 2-Day Lean Index for the
period ending November 15th was reported at 76.19, up $.41 from the previous
session and up from 75.38 the previous week. Weekly average weights for
Iowa/Minn for the week ending November 13th came in at 267 pounds, up .2 pounds
from the previous week and up 1.3 pounds from last year at this time.

Technical Outlook

HOGS (DEC) 11/18/2004: Momentum studies are
trending higher but have entered overbought levels. The market’s close above the
9-day moving average suggests the short-term trend remains positive. With the
close higher than the pivot swing number, the market is in a slightly bullish
posture. The near-term upside objective is at 76.050. The next area of
resistance is around 75.450 and 76.050, while 1st support hits today at 74.220
and below there at 73.570.

 

COCOA MARKET RECAP

11/17/2004

December Cocoa finished down 73 at 1616, 49 off
the high and 6 up from the low.

The cocoa market setback hard as stop loss
selling by small specs resulted in a major chart failure. With prices failing to
find support above a recent chart gap we can understand a wave of selling
hitting the market. However, it would still seem like anxiety is running high at
the Ivory Coast as the Press is still reporting that thousands of people are
fleeing the country. Most of those leaving the Ivory Coast are reportedly
foreigners and typically the foreigners are the ones who harvest the cocoa.
Therefore, the technical might be able to dominate the near term but once prices
fall down to the $1,550 level in March we suspect that the small spec and fund
long will be washed out and that fair value support will be respected.

Technical Outlook

COCOA (DEC) 11/18/2004: Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
The market’s close below the 9-day moving average is an indication the
short-term trend remains negative. The gap lower on the day session chart is
bearish and puts the market on the defensive. The market is in a bearish
position with the close below the 2nd swing support number. The next downside
objective is now at 1572. The next area of resistance is around 1643 and 1681,
while 1st support hits today at 1589 and below there at 1572.

 

COFFEE MARKET RECAP

11/17/2004

December Coffee closed up 2.00 at 88.05. This was
4.05 up from the low and 1.70 off the high.

The coffee market continues exhibit extremely
volatile trade action despite the fact that weather really isn’t a major issue
in Brazil. We do think that the fund interest in the market is serving to whip
prices around especially with the funds reportedly buying early, and then the
funds returned to buy even more later in the day on weakness. We thought that
the coffee market was expecting to see a sharper decline in monthly exchange
stocks early this week but the stocks declined by only about half the expected
measure. Therefore, we don’t get the sense that the recent rally is the result
of the expectation of tighter supply.

Technical Outlook

COFFEE (DEC) 11/18/2004: Stochastics turning
bearish at overbought levels will tend to support lower prices if support levels
are broken. A positive signal for trend short-term was given on a close over the
9-bar moving average. The daily closing price reversal up on the daily chart is
somewhat positive. The market setup is supportive for early gains with the close
over the 1st swing resistance. The next downside target is now at 81.75. The
next area of resistance is around 90.90 and 93.20, while 1st support hits today
at 85.20 and below there at 81.75.

 

SUGAR MARKET RECAP

11/17/2004

March Sugar closed down 0.18 at 8.69. This was
0.03 up from the low and 0.24 off the high.

A massive range down move has to catch some small
spec longs in bad positions and that could result in more stop loss selling in
the sessions ahead. Naturally the funds were also noted as big sellers Wednesday
and considering the overall small spec and fund long position it might be
difficult to stop the selling without an extension down below 850. Producer
hedge selling and a lack of physical business cleared the way for the downside
thrust and in the near term the trade only expects to see light scale down
buying.

Technical Outlook

SUGAR (MAR) 11/18/2004: The close below the
40-day moving average is an indication the longer-term trend has turned down.
The moving average crossover up (9 above 18) indicates a possible developing
short-term uptrend. Momentum studies are rising from mid-range, which could
accelerate a move higher if resistance levels are penetrated. The market’s close
above the 9-day moving average suggests the short-term trend remains positive.
The outside day down is a negative signal. The close below the 1st swing support
could weigh on the market. The near-term upside objective is at 9.01. The next
area of resistance is around 8.82 and 9.01, while 1st support hits today at 8.56
and below there at 8.48.

 

COTTON MARKET RECAP

11/17/2004

December Cotton finished up 0.55 at 47.14, 0.16
off the high and 1.04 up from the low.

The cotton market continues to be mired within
the long term down trend pattern despite recent concerns over poor weather. We
have to think that cotton prices are being pressured by the rising fear of
soybean rust in the Gulf production states as many farmers might shy away from
soybeans next year and plant cotton, corn and wheat instead. Expectations for
the weekly cotton export sales report call for 80,000 to 150,000 bales compared
to 167,000 bales last week. So far, a falling Dollar and improving outlook
toward the world economy has done very little to discourage ongoing selling in
cotton.

Technical Outlook

COTTON (DEC) 11/18/2004: Positive momentum
studies in the neutral zone will tend to reinforce higher price action. The
market’s short-term trend is positive on the close above the 9-day moving
average. With the close higher than the pivot swing number, the market is in a
slightly bullish posture. The near-term upside objective is at 48.12. The next
area of resistance is around 47.74 and 48.12, while 1st support hits today at
46.54 and below there at 45.72.