Here’s Our Outlook On The Dollar

The market found some support from solid export
sales and strength in the other grain markets which helped trigger some light
short-covering. A steady to firm tone for the cash market at the gulf due to
tight producer holding added to the positive tone. Weekly export sales came in
at 725,800 tons as compared with trade expectations at 600,000-800,000 tons and
774,300 tons necessary each week to reach the USDA projection. Cumulative sales
have reached just 43.8% of the USDA forecast for the season as compared with
45.8% on average for this time of the year. Support for March Corn comes in at
203 1/2 with resistance at 206 3/4.

Technical Outlook

CORN (MAR) 12/27/2004: Momentum studies are
rising from mid-range, which could accelerate 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 setup is supportive for early gains
with the close over the 1st swing resistance. The next upside target is 208 1/4.
The next area of resistance is around 207 3/4 and 208 1/4, while 1st support
hits today at 206 1/4 and below there at 205.

 

SOY COMPLEX RECAP

12/23/2004

January Soybeans finished down 2 3/4 at 546 1/4,
2 3/4 off the high and 2 1/4 up from the low. March Soybeans closed down 1 3/4
at 545. This was 3 1/2 up from the low and 2 off the high.

March Soymeal closed down 0.1 at 159.6. This was
1.4 up from the low and 0.9 off the high.

March Soybean Oil finished up 0.01 at 21, 0.09
off the high and 0.34 up from the low.

Stronger than expected export news along with
slow volume helped support the soybean complex but weather looks to be a bearish
force next week as crop conditions seem to be improving in Brazil. Weekly export
sales came in at 1.157 million tons as compared with trade expectations at
750,000-950,000 tons and 241,100 tons necessary each week to reach the USDA
projection. Cumulative sales have reached 67.7% of the USDA forecast for the
season as compared with 68.4% on average for this time of the year. China was
the best buyer at 579,000 tons of the total. Weekly export sales for meal came
in at 138,800 tons vs. trade expectations at 50,000-125,000 tons. Cumulative
sales have reached 62.1% of the USDA forecast for the season as compared with
53% on average for this time of the year. Oil sales were 18,400 tons from
expectations at 5,000-15,000 tons. Taiwan passed on a tender to buy US soybeans
overnight which limited the buying enthusiasm.

Technical Outlook

BEANS (JAN) 12/27/2004: 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. Market positioning is positive with
the close over the 1st swing resistance. The next upside target is 554 3/4. The
next area of resistance is around 552 3/4 and 554 3/4, while 1st support hits
today at 548 1/4 and below there at 546.

MEAL (JAN) 12/27/2004: Stochastics trending lower
at midrange will tend to reinforce a move lower especially if support levels are
taken out. The cross over and close above the 18-day moving average is an
indication the longer-term trend has turned 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 downside target is now
at 158.7. The next area of resistance is around 162.5 and 163.1, while 1st
support hits today at 160.3 and below there at 158.7.

BEANOIL (JAN) 12/27/2004: Momentum studies are
trending higher but have entered overbought levels. The cross over and close
above the 18-day moving average indicates the longer-term trend has turned up.
The market has a slightly positive tilt with the close over the swing pivot. The
near-term upside objective is at 21.24. The next area of resistance is around
21.12 and 21.24, while 1st support hits today at 20.91 and below there at 20.81.

 

WHEAT MARKET RECAP

12/23/2004

March Wheat finished up 1 1/2 at 307, 1 off the high and 2 up
from the low. May Wheat closed up 2 3/4 at 315. This was 2 3/4 up from the low
and equal to the high.

Strong export sales and rumors of more business
soon helped support the early gains for wheat. Weekly export sales came in at
608,800 tons as compared with trade expectations at 400,000-600,000 tons and
302,300 tons necessary each week to reach the USDA projection. Cumulative sales
have reached 73.5% of the USDA forecast for the season as compared with 64.9% on
average for this time of the year. Winterkill damage is thought to be light due
to insulating snow cover for much of the soft red growing region. South Korea
bought 23,500 tons of US wheat overnight. Iraq rumors of a purchase of 500,000
tons persist but nothing has been confirmed. Support for March wheat comes in at
306 with 310 1/2 and 315 1/2 as next resistance.

Technical Outlook

WHEAT (MAR) 12/27/2004: Rising stochastics at
overbought levels warrant some caution for bulls. The major trend could be
turning up with the close back above the 18-day moving average. With the close
over the 1st swing resistance number, the market is in a moderately positive
position. The next upside objective is 313. The next area of resistance is
around 311 3/4 and 313, while 1st support hits today at 307 1/4 and below there
at 304 1/4.

 

LIVE CATTLE RECAP

12/23/2004

February Live Cattle closed down 0.02 at 91.15.
This was 0.60 up from the low and 0.55 off the high.

January Feeder Cattle finished down 0.57 at
104.72, 1.27 off the high and 0.47 up from the low.

December cattle surged to a new contract high due
to the weather situation in the plains and this helped to drag February cattle
higher on the day after a lower opening. The weather looks to turn warmer and
drier in the plains for the weekend but more rain on Monday/Tuesday could keep
feedlot conditions muddy into next week. Ideas that packer demand will be weak
in the first week of 2005 due to contracted cattle helped limit the buying
support for the February futures. Boxed-beef cut-out values at mid-session were
down $.26 to $141.20 as compared with $139.79 last week at this time. Without
poor weather, the supply of market-ready cattle looks to be higher than packer
demand into early 2005 which should pressure the cash.

Technical Outlook

CATTLE (FEB) 12/27/2004: Momentum studies are
trending higher but have entered overbought levels. The cross over and close
above the 18-day moving average indicates the longer-term trend has turned up.
With the close higher than the pivot swing number, the market is in a slightly
bullish posture. The next upside objective is 92.200. The market is approaching
overbought levels with an RSI over 70. The next area of resistance is around
91.920 and 92.200, while 1st support hits today at 91.170 and below there at
90.670.

 

LEAN HOGS RECAP

12/23/2004

February Lean Hogs closed unchanged at 73.10.
This was 0.45 up from the low and 0.30 off the high.

February Pork Bellies finished down 1.50 at
95.70, 0.80 off the high and 0.45 up from the low.

The market pushed slightly higher on the session
as talk of higher trade in the cash market for next week helped support. After a
very profitable year for producers, some traders believe that producer
marketings could slow next week as producers try to move some income into next
year. Weakness in the pork product market was offset by a general feeling that
February hogs could expand the premium of futures over the cash market into
early next year. The CME 2-day lean index for the period ending December 21st
was reported at 67.55, down $1.54 on the session and down from 77.45 earlier
last week.

Technical Outlook

HOGS (FEB) 12/27/2004: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The market now above the 18-day moving average
suggests the longer-term trend has turned up. The market setup is supportive for
early gains with the close over the 1st swing resistance. The near-term upside
target is at 74.470. The next area of resistance is around 74.200 and 74.470,
while 1st support hits today at 73.420 and below there at 72.900.

 

COCOA MARKET RECAP

12/23/2004

March Cocoa finished up 15 at 1587, 14 off the
high and 31 up from the low.

Cocoa prices were very weak with the market
violating the prior days low and flirting with the established consolidation
zone of $1,550. Apparently the funds and small specs were both sellers Thursday
and this time there didn’t appear to be much in the commercial or trade buying
stepping in to stop the slide. We would have expected the sharply lower US
Dollar to have inspired some buying but the trade just couldn’t muster anything
from the bull camp.

Technical Outlook

COCOA (MAR) 12/27/2004: The close below the
60-day moving average is an indication the longer-term trend has turned down.
Momentum studies are still bearish but are now at oversold levels and will tend
to support reversal action if it occurs. The close under the 18-day moving
average indicates the longer-term trend could be turning down. The market’s
close below the 1st swing support number suggests a moderately negative setup
for today. The next downside objective is 1523. The next area of resistance is
around 1571 and 1598, while 1st support hits today at 1533 and below there at
1523.

 

COFFEE MARKET RECAP

12/23/2004

March Coffee closed down 3.80 at 101.25. This was
2.25 up from the low and 3.25 off the high.

The coffee market recovered from yesterday’s
massive sell off to close 4.70 higher on the day and 2.50 off Tuesday’s contract
highs. A recovery overnight in the London market set the stage for higher price
action in NY. Spec buying was noted in London this morning as the Vietnam crop
is just not as large as traders had anticipated. The bullish new crop
fundamental set-up and ideas that the 2004/2005 marketing year could also see a
production deficit helped provide underlying support.

Technical Outlook

COFFEE (MAR) 12/27/2004: The daily stochastics
gave a bullish indicator with a crossover up. Daily stochastics have risen into
overbought territory which will tend to support reversal action if it occurs.
The major trend could be turning up with the close back above the 18-day moving
average. A positive setup occurred with the close over the 1st swing resistance.
The near-term upside target is at 109.55. The next area of resistance is around
107.55 and 109.55, while 1st support hits today at 102.70 and below there at
99.80.

 

SUGAR MARKET RECAP

12/23/2004

March Sugar closed up 0.01 at 8.86. This was 0.11
up from the low and 0.02 off the high.

March sugar rallied early in the session due to
solid gains in London and light trade house buying but a lack of follow-through
buying and fears that speculators might reduce their net long position next week
ahead of the end of the year helped pull the market back to near unchanged into
the close. The European Union sold 66,000 tons at their weekly export tender as
compared with expectations at 50,000-80,000 tons. Volume was light as traders
moved to the sidelines early in the session for the holiday. The large crop in
Brazil is being offset by the surge in demand for both export and ethanol
production.

Technical Outlook

SUGAR (MAR) 12/27/2004: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The market now above the 18-day moving average suggests the
longer-term trend has turned up. The market has a slightly positive tilt with
the close over the swing pivot. The near-term upside objective is at 8.97. The
next area of resistance is around 8.91 and 8.97, while 1st support hits today at
8.81 and below there at 8.76.

 

COTTON MARKET RECAP

12/23/2004

March Cotton finished down 0.90 at 42.72, 0.98
off the high and 0.51 up from the low.

March cotton opened higher but failed to attract
much buying support with poor export sales helping to offset short-covering.
Weekly export sales came in at only 176,200 bales as compared with trade
expectations at 250,000-300,000 bales and 119,400 bales necessary each week to
reach the USDA projection. Cumulative sales have reached just 65.5% of the USDA
forecast for the season as compared with 71.7% on average for this time of the
year. China was the largest buyer at 58,000 bales. Shipements came in at 215,600
bales which was in line with expectations. Volume was slow for holiday trade.
Certified exchange stocks deliverable against the exchange totaled 56,785 as
December 22nd from 50,233 bales on the 17th. 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) 12/27/2004: The upside crossover of
the 9 & 18 bar moving average is a positive signal. The daily stochastics gave a
bearish indicator with a crossover down. Momentum studies trending lower at
mid-range should accelerate a move lower if support levels are taken out. The
major trend has turned down with the cross over back below the 18-day moving
average. With the close higher than the pivot swing number, the market is in a
slightly bullish posture. The next downside objective is 42.34. The next area of
resistance is around 43.14 and 43.31, while 1st support hits today at 42.66 and
below there at 42.34.