Here’s How You Can Tell There Are Still Buyers On The Sidelines

Follow-through technical buying helped support
the early bounce after the March contract experienced a daily and a weekly
reversal from contract lows last week. A gap on a Monday is also considered a
supportive factor. While the technical action looks promising, the market also
seems to have an extreme oversold condition with the weekend COT report with
options showing that speculators were net short 131,595 contracts as of November
30th which is within 5% of the historical extreme. Overnight export news was
quiet. Weekly export inspections came in at 42.8 million bushels as compared
with trade expectations at 27-32 million. Cumulative shipments have reached
22.2% of the USDA forecast for the season as compared with 26.5% on average for
this time of the year. Resistance for March Corn comes in at 210 3/4 and 212 1/2
with support at 207 1/2 and 205 1/2.

Technical Outlook

CORN (MAR) 12/07/2004: Daily stochastics are
showing positive momentum from oversold levels, which should reinforce a move
higher if near-term resistance is taken out. The market’s close above the 9-day
moving average suggests the short-term trend remains positive. If yesterday’s
gap higher on the day session chart holds, additional buying could develop this
session. With the close over the 1st swing resistance number, the market is in a
moderately positive position. The next upside objective is 210. Daily studies
suggest buying dips today. The next area of resistance is around 209 1/2 and
210, while 1st support hits today at 208 1/2 and below there at 207 3/4.

 

SOY COMPLEX RECAP

12/6/2004

January Soybeans finished up 4 at 529 3/4, 4 off
the high and 3 3/4 up from the low. March Soybeans closed up 4 1/4 at 534. This
was 4 up from the low and 3 off the high.

January Soymeal closed up 4.1 at 158.4. This was
2.7 up from the low and 0.1 off the high.

January Soybean Oil finished down 0.23 at 20.18,
0.36 off the high and 0.07 up from the low.

Follow-through technical buying after the solid
gains on Friday helped support speculative short-covering early in the session
and the market managed to hold the gains for much of the day. Continued talk
about new demand from China from late last week provided follow-through buying
support as well. Favorable weather for the tail end of the planting season in
Brazil and for the early growing season helped to limit the buying support with
traders believing the Brazil crop is over 90% planted to start this week.
Midwest cash basis levels are steady to firm on tight producer holding. Oil
deliveries were down to zero this morning with meal at 85 contracts. Weekly
export inspections came in at 34.46 million bushels as compared with 30-34
million expected. Cumulative shipments have reached 40.2% of the USDA forecast
for the season as compared with 37.2% on average for this time of the year. News
that ADM plans to expand its crushing and refining capacity in Oregon helped
provide some demand support on the session as bio-diesel demand is picking up
steam. Resistance for January soybeans comes in at 532 1/4 and 539 1/4 with
support at 526 and 521.

Technical Outlook

BEANS (JAN) 12/07/2004: A negative indicator was
given with the downside crossover of the 9 & 18 bar moving average. Momentum
studies trending lower at mid-range could accelerate a price break if support
levels are broken. A negative signal for trend short-term was given on a close
under the 9-bar moving average. A positive setup occurred with the close over
the 1st swing resistance. The next downside target is now at 522 1/4. The next
area of resistance is around 533 1/2 and 537 1/2, while 1st support hits today
at 526 and below there at 522 1/4.

MEAL (JAN) 12/07/2004: The cross over and close
above the 40-day moving average is an indication the longer-term trend has
turned positive. Momentum studies trending lower at mid-range should accelerate
a move lower if support levels are taken out. 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 next
downside target is 155.8. The next area of resistance is around 160.7 and 161.5,
while 1st support hits today at 157.9 and below there at 155.8.

BEANOIL (JAN) 12/07/2004: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
market’s short-term trend is negative as the close remains below the 9-day
moving average. The outside day down is somewhat negative. The close below the
1st swing support could weigh on the market. The next downside objective is now
at 19.83. The next area of resistance is around 20.39 and 20.67, while 1st
support hits today at 19.97 and below there at 19.83.

 

WHEAT MARKET RECAP

12/6/2004

December Wheat finished up 2 at 293, 3 off the high and 1/2 up
from the low. March Wheat closed up 1 at 305 1/2. This was 1 1/4 up from the low
and 2 1/2 off the high.

The market managed to close higher on the session
but the close below the opening and the close which was 2 1/2 cents off the
highs of the day is not too impressive. The market found technical buying
support early in the session in response to the weekly closing price reversal
from a contract low last week. In addition, the trade remains a bit concerned
with the availability of quality wheat for export. Fridays report that just 19%
of the Saskatchewan spring wheat crop would achieve the top two quality grades
and that 60% of the spring wheat crop was downgraded to livestock feed helped
provide underlying support. Weekly export inspections came in at 24.6 million
bushels as compared with trade expectations at 10-15 million. Cumulative
shipments have reached 60.9% of the USDA forecast for the season as compared
with 54.9% on average for this time of the year. Deliveries this morning came in
at 248 lots. The Commitment-of-Traders report with options on Friday showed the
combined net short position of the large and small trader had reached a historic
extreme and the fund net short position had reached a record high as of November
30th. This leaves the market vulnerable to short-covering if resistance levels
are violated. Resistance for March wheat comes in at 308 3/4 and 313 1/4 with
305 and 299 3/4 as support.

Technical Outlook

WHEAT (MAR) 12/07/2004: The stochastic indicator
is rising from oversold levels, which is bullish and should support higher
prices. 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 target is at 309 1/2. The
next area of resistance is around 307 1/4 and 309 1/2, while 1st support hits
today at 303 3/4 and below there at 302 1/4.

 

LIVE CATTLE RECAP

12/6/2004

February Live Cattle closed up 0.32 at 87.90.
This was 1.07 up from the low and 0.05 off the high.

January Feeder Cattle finished down 0.50 at
101.40, 0.35 off the high and 0.77 up from the low.

February cattle took out Friday’s lows early in
the session due to collapsing pork values and bearish weather forecasts but a
lack of follow through selling after hogs locked limit-down and ideas that the
showlist may not improve much this week due to the weather supported the late
short-covering bounce. February cattle closed 32 higher on the session and
closed up 107 points from the day’s lows. Boxed-beef cut-out values were down 75
cents at mid-session to $148.09 as compared with $141.88 last week at this time.
Slaughter came in at 126,000 head from trade expectations of 113,000-120,000
head. The higher than expected slaughter could indicate stronger than expected
demand from packers.

Technical Outlook

CATTLE (FEB) 12/07/2004: Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. The market’s short-term trend is negative as the close remains below the
9-day moving average. The daily closing price reversal up is a positive
indicator that could support higher prices. The close over the pivot swing is a
somewhat positive setup. The next downside target is now at 86.520. The next
area of resistance is around 88.450 and 88.750, while 1st support hits today at
87.350 and below there at 86.520.

 

LEAN HOGS RECAP

12/6/2004

February Lean Hogs closed down 2.00 at 73.32.
This was equal to the low and 1.52 off the high.

February Pork Bellies finished down 3.00 at
96.85, 2.85 off the high and equal to the low.

February hogs pushed limit-down into the
mid-session led by lower cash trade. The outlook for higher production and
expectations for lower cash markets for later this week and ideas that the
market is still overbought contributed to the aggressive long liquidation
selling. Weakness in pork prices late last week and concerns that more beef next
year (if Canadian cattle begin to flow) will compete with pork prices and drag
prices lower added to the bearish tone. The CME 2-day lean index for the period
ending December 2nd was reported at 79.89, up $1.08 from the previous session
and up from 77.80 last week at this time. The stiff discount of futures to the
cash market failed to provide support with the focus of attention on long
liquidation of a hefty net long position from fund traders. Daily slaughter came
in at 401,000 head from trade expectations of 398,000-401,000 head. The higher
than expected slaughter could cool off ideas that packer demand is weak due to
pinched margins.

Technical Outlook

HOGS (FEB) 12/07/2004: Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
A negative signal for trend short-term was given on a close under the 9-bar
moving average. The gap lower on the day session chart is bearish and puts the
market on the defensive. The defensive setup, with the close under the 2nd swing
support, could cause some early weakness. The next downside objective is now at
72.200. The next area of resistance is around 74.070 and 75.220, while 1st
support hits today at 72.570 and below there at 72.200.

 

COCOA MARKET RECAP

12/6/2004

March Cocoa finished up 4 at 1714, 9 off the high
and 23 up from the low.

The cocoa market managed another upward pulse
Monday and did so off what appears to be arbitrage buying off a stronger Dollar
and weekend talk that the French might have fired on unarmed protestors in the
recent killings at the Ivory Coast. Even against the hope for an Ivory Coast
Peace deal the market seems to favor the upside and with the arrival rate
running behind year ago levels and so much of the main crop harvest in uncertain
hands we can understand the market favoring the bull case in the short term. On
the other hand the main buyers in the fray Monday seemed to be the small specs
and that is a sign of a short term overbought status.

Technical Outlook

COCOA (MAR) 12/07/2004: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The close above the 9-day moving average is a positive
short-term indicator for trend. The close over the pivot swing is a somewhat
positive setup. The next upside objective is 1742. The next area of resistance
is around 1730 and 1742, while 1st support hits today at 1698 and below there at
1679.

 

COFFEE MARKET RECAP

12/6/2004

March Coffee closed down 0.30 at 97.65. This was
0.90 up from the low and 0.75 off the high.

The coffee market eased slightly on Monday with
March futures down 30 on the session with a small trading range. After volatile
trade last week, volume was slow as traders await a key production forecast from
the Brazil government on Friday. The projections will include satellite imagery
which the government believes will give a closer estimate to actual production
than previous methods. The lack of activity from fund traders, who held a record
net long position at the end of November, contributed to the quiet trade.
Traders look for a revision in the old crop production from Brazil for the
2004/2005 crop with their last estimate at 38.3 million bags. For the 2005/2006
crop, traders are looking for the crop between 33 and 38 million bags. NYBOT
exchange warehouse stocks were up 2,320 bags to 4.55 million bags with 33,415
bags pending review.

Technical Outlook

COFFEE (MAR) 12/07/2004: Momentum studies are
trending lower from high levels which should accelerate a move lower on a break
below the 1st swing support. The market’s close above the 9-day moving average
suggests the short-term trend remains positive. The market has a slightly
positive tilt with the close over the swing pivot. The next downside objective
is 96.00. The next area of resistance is around 98.45 and 99.25, while 1st
support hits today at 96.85 and below there at 96.00.

 

SUGAR MARKET RECAP

12/6/2004

March Sugar closed up 0.06 at 8.86. This was 0.05
up from the low and 0.02 off the high.

March sugar closed 6 points higher on the session
led by a strong market in London before the opening and from ideas that the
small Thailand crop size this year along with firm fuel demand in Brazil should
support the market. Trade was quiet as the potential buyers continue to wait on
the sidelines for a better sign that there is commercial buying demand near the
current level. Concerns stem from the massive net long position of the
speculator in the weekend traders report and fear that speculators may reduce
their net long position ahead of the end of the year. Talk of demand from
Indonesia, Egypt and Libya helped to support the market.

Technical Outlook

SUGAR (MAR) 12/07/2004: The major trend could be
turning up with the close back above the 40-day moving average. Daily
stochastics turning lower from overbought levels is bearish and will tend to
reinforce a downside break especially if near-term support is penetrated. The
market’s close below the 9-day moving average is an indication the short-term
trend remains negative. With the close over the 1st swing resistance number, the
market is in a moderately positive position. The next downside objective is now
at 8.79. The next area of resistance is around 8.89 and 8.92, while 1st support
hits today at 8.83 and below there at 8.79.

 

COTTON MARKET RECAP

12/6/2004

March Cotton finished up 0.11 at 42.53, 0.12 off
the high and 0.81 up from the low.

March cotton posted a new contract low on the
session, closed higher on the day and closed above the opening. The reversal,
after hitting the new low suggest solid trade house demand under the market and
the technical reversal could attract fund short-covering for the rest of this
week. While the weather looks bearish for harvest activity this week, the trade
is hopeful that poor weather for harvest and strong demand from China could help
support improving (smaller) ending stock numbers for Friday’s supply/demand
report. The aggressive trade house buying was thought to be coming from
improving export news as step 2 payments and the weak US dollar has attracted
increased interest in US cotton. Certified cotton stocks deliverable to the
exchange as of December 3rd totaled 84,534 bales from 84,445 the previous
session and 76,482 bales earlier last week.

Technical Outlook

COTTON (MAR) 12/07/2004: The market made a new
contract low on the break. Momentum studies trending lower at mid-range could
accelerate a price break if support levels are broken. A negative signal for
trend short-term was given on a close under the 9-bar moving average. The upside
closing price reversal on the daily chart is somewhat bullish. It is a slightly
negative indicator that the close was lower than the pivot swing number. The
next downside target is now at 41.43. The next area of resistance is around
42.99 and 43.28, while 1st support hits today at 42.07 and below there at 41.43.