Impressive Market Today, Especially In Light Of This…

Early weakness was triggered by talk that the
rally yesterday was too far too fast and that the rally lacked fundamental
justification which helped to pressure futures early but signs of increased
export activity helped to provide underlying support. Taiwan is tendering for
40,000-60,000 tons of US corn and South Korea is tendering for 55,000 tons of
optional origin corn. A firm tone for the basis at the gulf and slow producer
selling helped to provide support as well. China exported 43,284 tons for the
month of November which brought total exports for the 11 months of 2004 to 1.974
million tons, down 84.9% from last years pace. Traders remain cautious on the
sell side with funds holding a record net short position in the last COT report
with options. Support for March Corn comes in at 205 1/4 and 204 1/2 with
resistance at 206 3/4 and 209 1/2.

Technical Outlook

CORN (MAR) 12/22/2004: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The cross over and close above the 18-day moving average
indicates the longer-term trend has turned up. It is a slightly negative
indicator that the close was under the swing pivot. The next upside objective is
206 3/4. The next area of resistance is around 206 1/4 and 206 3/4, while 1st
support hits today at 205 1/4 and below there at 204 1/2.

 

SOY COMPLEX RECAP

12/21/2004

January Soybeans finished down 1 at 549, 3 off
the high and 2 up from the low. March Soybeans closed down 1 3/4 at 546 3/4.
This was 3/4 up from the low and 4 1/4 off the high.

March Soymeal closed unchanged at 159.7. This was
0.7 up from the low and 1.0 off the high.

March Soybean Oil finished up 0.02 at 20.99, 0.06
off the high and 0.14 up from the low.

A lack of market-moving fundamental news kept the
market choppy in a two-sided trade early in the session. Weakness stemmed from
lower Midwest cash basis level but a firm tone in basis at the gulf (a recovery
from weakness yesterday) along with continued talk of interest from China helped
to provide underlying support. Iran was a noted buyer of 35,000 tons of Brazil
oil. Cold weather has helped to boost usage for meal. However, prospects for a
large crop in South America and fears of increased producer selling into early
2005 have kept the tone weak. For the Census Bureau oilmill report for release
before the opening tomorrow traders look for November crush near 151.5-152
million bushels as compared with October at 155.96 million. Oil stocks are
expected near 1.288 billion pounds with meal stocks near 367,000 tons. The weak
technical close leaves the market in a position to test Friday’s trading range.
Support for March soybeans comes in at 544 1/2 and 542 with resistance at 550
3/4 and 558.

Technical Outlook

BEANS (JAN) 12/22/2004: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The market now above the 18-day moving average suggests
the longer-term trend has turned up. The market tilt is slightly negative with
the close under the pivot. The near-term upside objective is at 554 1/4. The
next area of resistance is around 551 1/2 and 554 1/4, while 1st support hits
today at 546 1/2 and below there at 544 1/4.

MEAL (JAN) 12/22/2004: Negative momentum studies
in the neutral zone will tend to reinforce lower price action. The major trend
could be turning up with the close back above the 18-day moving average. It is a
slightly negative indicator that the close was under the swing pivot. The next
downside target is 158.0. The next area of resistance is around 159.8 and 160.5,
while 1st support hits today at 158.6 and below there at 158.0.

BEANOIL (JAN) 12/22/2004: The moving average
crossover up (9 above 18) indicates a possible developing short-term uptrend.
Momentum studies are trending higher from mid-range, which should support a move
higher if resistance levels are penetrated. The major trend could be turning up
with the close back above the 18-day moving average. It is a slightly negative
indicator that the close was under the swing pivot. The near-term upside target
is at 21.04. The next area of resistance is around 20.95 and 21.04, while 1st
support hits today at 20.77 and below there at 20.67.

 

WHEAT MARKET RECAP

12/21/2004

March Wheat finished down 1/2 at 305 1/2, 2 off the high and 3
up from the low. May Wheat closed down 3/4 at 312 1/4. This was 2 1/4 up from
the low and 2 off the high.

Some light short-covering from speculators
supported the early bounce but more and more talk that the next cold weather
blast into the southern Midwest for later this week will be preceded by snow
cover which will help to protect the crop helped to trigger selling. Talk of
lower than expected planted acreage for the soft red wheat crop and rumors of
firm export business helped to provide support. March held minor support on the
break to close back near unchanged. Pakistan is tendering for 400,000 tons of
milling wheat and expectations of another 100,000 ton tender soon while there
are unconfirmed rumors that Iraq bought US wheat at their tender. China imported
636,659 tons for the month of November which brought total imports for the 11
months of 2004 to 6.609 million tons as compared with 370,712 tons for the first
11 months of 2003. Support for March wheat comes in at 302 1/4 and 300 1/2 with
307 and 308 3/4 as resistance.

Technical Outlook

WHEAT (MAR) 12/22/2004: The upside crossover (9
above 18) of the moving averages suggests a developing short-term uptrend.
Stochastics are at mid-range but trending higher, which should reinforce a move
higher if resistance levels are taken out. The major trend could be turning up
with the close back above the 18-day moving average. It is a slightly negative
indicator that the close was under the swing pivot. The next upside objective is
310 1/4. The next area of resistance is around 308 and 310 1/4, while 1st
support hits today at 303 and below there at 300 1/4.

 

LIVE CATTLE RECAP

12/21/2004

February Live Cattle closed up 1.45 at 91.17.
This was 1.32 up from the low and 0.47 off the high.

January Feeder Cattle finished up 1.97 at 105.30,
0.10 off the high and 2.15 up from the low.

The market surged higher to challenge contract
highs for February futures as the jump in beef prices and higher cash market
bids from packers helping to trigger active fund and speculative buying. Small
speculators were holding a hefty net short position in the last traders report
and with April futures up more than 500 points in the last 5 sessions,
short-covering has accelerated. Packer bids moved up to $86 in the cash market
which is steady with last weeks trade while the higher beef price could
encourage bids to firm later this week as the plains take on snow. Boxed-beef
cut-out values at mid-session were up $2.23 to $141.01 as compared with 140.58
last week at this time. Slaughter came in at 120,000 head as compared with trade
expectations at 124,000-127,000.

Technical Outlook

CATTLE (FEB) 12/22/2004: Rising stochastics at
overbought levels warrant some caution for bulls. The cross over and close above
the 18-day moving average indicates the longer-term trend has turned up. There
could be more upside follow through since the market closed above the 2nd swing
resistance. The next upside objective is 92.750. The next area of resistance is
around 92.070 and 92.750, while 1st support hits today at 90.300 and below there
at 89.170.

 

LEAN HOGS RECAP

12/21/2004

February Lean Hogs closed unchanged at 73.10.
This was 0.80 up from the low and 0.15 off the high.

February Pork Bellies finished down 0.07 at
97.20, 0.45 off the high and 0.40 up from the low.

The early break was triggered by a weaker tone in
the cash market with Peoria down $2.00 on the day but strength in the cattle
market and a little less concern with the February premium to the cash market
helped support the late strength. In spite of the cold weather in the northern
Midwest, marketings have kept pace this week and packers are finding enough hogs
to keep the daily slaughter near capacity. Traders await the Monthly and weekly
cold storage reports for release this afternoon. The monthly cold storage report
is expected to show belly stocks near 32.5-37.9 million pounds as compared with
33.1 million pounds last year. Traders will also watch total frozen pork
movement and the ham stocks. The CME 2-day lean index for the period ending
December 17th was reported at 70.20, down $1.46 on the session. Slaughter came
in at 406,000 head as compared with trade expectations at 395,000-403,000.
Positive packer profit margins have supported the active slaughter pace.

Technical Outlook

HOGS (FEB) 12/22/2004: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The market back below the 18-day moving average suggests
the longer-term trend could be turning down. It is a slightly negative indicator
that the close was under the swing pivot. The near-term upside target is at
73.870. The next area of resistance is around 73.570 and 73.870, while 1st
support hits today at 72.650 and below there at 72.000.

 

COCOA MARKET RECAP

12/21/2004

March Cocoa finished down 19 at 1572, 18 off the
high and 3 up from the low.

Cocoa prices continued to slide with a new low
for the move and the lowest prices since November 29th. Apparently the trade is
starting to circulate rumors that the arrival rates are in fact running above
the levels that the market has been factoring. While the low arrival rate
certainly combined to get some support to the market that factor was not the
sole source of the bull case and therefore, once nearby cocoa prices return to
the consolidation lows down around $1,550 we suspect that the majority of the
arrival issue will be removed from the fray. A moderate bounce in the Dollar was
though to apply some additional pressure to cocoa and with the bias already down
the added pressure served to sink prices even further.

Technical Outlook

COCOA (MAR) 12/22/2004: Daily stochastics are
trending lower but have declined into oversold territory. The close below the
18-day moving average is an indication the longer-term trend has turned down.
The close below the 1st swing support could weigh on the market. The next
downside target is now at 1555. The next area of resistance is around 1582 and
1596, while 1st support hits today at 1562 and below there at 1555.

 

COFFEE MARKET RECAP

12/21/2004

March Coffee closed down 1.75 at 105.05. This was
0.15 up from the low and 3.65 off the high.

The coffee market managed another aggressive
upward thrust but failed to sustain the highs and ended up leaving an extremely
negative chart setup in place. However, with Brazilian coffee sources expecting
to see lower production and decent pricing in the coming cycle we have to think
that coffee will be able to respect chart support at 102 and the November and
December consolidation down around 95 to 100. Apparently a slackening of origin
sales has allowed the coffee market to manage some gains it otherwise might not
have been able to manage. On the other hand, with the funds buying consistently
we are growing concerned about a year end profit taking setback.

Technical Outlook

COFFEE (MAR) 12/22/2004: The market made a new
contract high on the rally. Studies are showing positive momentum but are now in
overbought territory, so some caution is warranted. The cross over and close
above the 18-day moving average is an indication the longer-term trend has
turned positive. The daily closing price reversal down puts the market on the
defensive. The market setup is somewhat negative with the close under the 1st
swing support. The near-term upside target is at 109.70. The next area of
resistance is around 106.95 and 109.70, while 1st support hits today at 103.20
and below there at 102.15.

 

SUGAR MARKET RECAP

12/21/2004

March Sugar closed down 0.03 at 8.85. This was
0.04 up from the low and 0.05 off the high.

March sugar closed slightly lower on the session
and consolidated the sharp gains for the week. Traders remain aware of a hefty
net long position of the speculator but the three week break into the December
16th lows has helped to correct the overbought condition. Egypt bought 30,000
tons of raw sugar. Weakness in London helped pressure the market early with talk
of some light producer selling but London March futures closed near the highs of
the day and down just slightly for the session.

Technical Outlook

SUGAR (MAR) 12/22/2004: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The cross over and close above the 18-day
moving average indicates the longer-term trend has turned up. It is a mildly
bullish indicator that the market closed over the pivot swing number. The
near-term upside objective is at 8.94. The next area of resistance is around
8.89 and 8.94, while 1st support hits today at 8.81 and below there at 8.77.

 

COTTON MARKET RECAP

12/21/2004

March Cotton finished down 0.37 at 43.62, 0.63
off the high and 0.02 up from the low.

For the second day in a row, higher trade early
in the session was met with light producer selling and a lack of trade house
buying to trigger a lower close and a close well below the opening. Traders
remain confident that the market can trade higher into the New Year but there
could be an increase in producer selling into the cash market as producers have
a little more incentive to move some cotton in the new tax year. Hefty world
crops this season has contributed to the excess supply with world and US enduing
stocks expected to rise sharply. Certified exchange stocks deliverable against
the exchange totaled 54,772 bales as of December 20th from 50,233 bales as of
December 17th and 49,072 bales on the 16th. The jump in stocks is a bit of a
negative development after the drop in stocks of the past few weeks.

Technical Outlook

COTTON (MAR) 12/22/2004: Positive momentum
studies in the neutral zone will tend to reinforce higher price action. The
major trend could be turning up with the close back above the 18-day moving
average. The close below the 1st swing support could weigh on the market. The
next upside objective is 44.42. The next area of resistance is around 43.94 and
44.42, while 1st support hits today at 43.30 and below there at 43.13.