The Grains Are Moving–Here’s The Story
BOND MARKET RECAP
2/24/2005
March Bonds finished down 0-03 at 113-24, 0-22
off the high and 0-03 up from the low.
March 10 Yr Treasury Notes finished down 0-035 at
111-100, 0-120 off the high and 0-010 up from the low.
The bull camp in Treasuries has to be
extremely disappointed as the US economic numbers could have justified a rally
in prices. Prices did rally but then they fell back which is a sign that the
bear camp and the threat of international rotation lives on. Some traders
suggested that a big decline in initial claims undermined Treasuries and the
fact that stocks came roaring back simply pushed even more longs from the fray.
We are a little surprised that the bonds weren’t supported more by recent rumors
that the Fed might actually be closer to on hold and might be looking to current
numbers for guidance. Recently the market seemed fully convinced that the Fed
was hiking rates consistently!
Technical Outlook
BONDS (MAR) 02/25/2005: Daily stochastics are
trending lower but have declined into oversold territory. The close under the
18-day moving average indicates the longer-term trend could be turning down. The
market tilt is slightly negative with the close under the pivot. The next
downside objective is now at 113-03. The next area of resistance is around
114-04 and 114-22, while 1st support hits today at 113-11 and below there at
113-03.
TNOTES (MAR) 02/25/2005: Daily stochastics are
trending lower but have declined into oversold territory. The major trend has
turned down with the cross over back below the 18-day moving average. It is a
slightly negative indicator that the close was under the swing pivot. The next
downside target is now at 110-295. Some caution in pressing the downside is
warranted with the RSI under 30. The next area of resistance is around 111-155
and 111-260, while 1st support hits today at 111-015 and below there at 110-295.
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STOCK INDICES RECAP
2/24/2005
March S&P finished up 8 at 1200.7, 0.6 off the
high and 12.9 up from the low.
March S&P E-Mini closed up 8 at 1200.75. This was
12.75 up from the low and 0.75 off the high.
March Dow closed up 65 at 10751. This was 103 up
from the low and 14 off the high.
The stock market managed to recover and that is
really impressive considering that US economic numbers were disappointing and
energy prices were mostly higher throughout the session. In other words, the
market turned a very bearish tide around and could have done so off comments
from the Fed that seemed like they were not totally entrenched in the rate hike
posture. Some Press reports suggested that stock prices rallied off signs that
oil prices were set to weaken but we saw oil prices reach a new contract high
and still make the second higher close of contract.
Technical Outlook
S&P 500 (MAR) 02/25/2005: The cross over and
close above the 60-day moving average indicates the longer-term trend has turned
up. Momentum studies trending lower at mid-range should accelerate a move lower
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. The
market’s close above the 2nd swing resistance number is a bullish indication.
The next downside objective is now at 1184.13. The next area of resistance is
around 1207.45 and 1211.12, while 1st support hits today at 1193.95 and below
there at 1184.13.
SP EMINI (MAR) 02/25/2005: The cross over and
close above the 60-day moving average indicates the longer-term trend has turned
up. Momentum studies trending lower at mid-range should accelerate a move lower
if support levels are taken out. The market now above the 18-day moving average
suggests the longer-term trend has turned up. A positive setup occurred with the
close over the 1st swing resistance. The next downside objective is now at
1184.13. The next area of resistance is around 1207.25 and 1211.12, while 1st
support hits today at 1193.75 and below there at 1184.13.
NASDAQ (MAR) 02/25/2005: Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. The close below the 18-day moving average is an indication the
longer-term trend has turned down. There could be more upside follow through
since the market closed above the 2nd swing resistance. The next downside
objective is 1484.75. The next area of resistance is around 1532.50 and 1540.75,
while 1st support hits today at 1504.50 and below there at 1484.75.
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CURRENCY MARKET RECAP
2/24/2005
March US Dollar finished up 22 at 8289, 21 off
the high and 32 up from the low.
March Euro finished down 0.28 at 132.07, 0.63 off
the high and 0.29 up from the low.
March Euro Dollar closed down 0.0025 at 97.005.
This was equal to the low and 0.005 off the high.
March Canadian Dollar closed down 0.22 at 80.57.
This was 0.52 up from the low and 0.17 off the high.
March British Pound finished up 0.1 at 190.93,
0.31 off the high and 0.47 up from the low.
March Swiss closed down 0.51 at 85.67. This was
0.29 up from the low and 0.54 off the high.
March Japanese Yen closed down 0.56 at 95.01.
This was 0.21 up from the low and 0.49 off the high.
While the Dollar showed some minor gains Thursday
the trade didn’t appear to be that interested in the upside. In fact, it would
seem like most of the upside in the Dollar was short covering instead of fresh
buying. With US economic numbers soft, we could have seen the Dollar fall back
into negative territory but it would seem like the bulls and bears are both
unwilling to press their opinions. In fact, with the weak US numbers it would
almost seem like the US Fed is backing down from the consistent rate hike
pattern and that could be seen as a shift in sentiment that serves to lock the
Dollar in a tighter range.
Technical Outlook
YEN (MAR) 02/25/2005: Momentum studies are rising
from mid-range, which could accelerate a move higher if resistance levels are
penetrated. The close under the 18-day moving average indicates the longer-term
trend could be turning down. The defensive setup, with the close under the 2nd
swing support, could cause some early weakness. The next upside target is 95.78.
The next area of resistance is around 95.36 and 95.78, while 1st support hits
today at 94.66 and below there at 94.38.
EURO (MAR) 02/25/2005: 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. The market could take on a defensive posture with the daily
closing price reversal down. The market’s close below the pivot swing number is
a mildly negative setup. The near-term upside objective is at 133.07. The next
area of resistance is around 132.53 and 133.07, while 1st support hits today at
131.61 and below there at 131.24.
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PRECIOUS METALS RECAP
2/24/2005
April Gold closed down 0.4 at 435.7. This was 2.2
up from the low and 2.5 off the high.
March Silver finished down 0.06 at 7.383, 0.107
off the high and 0.098 up from the low.
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The gold market did manage to forge a new high
for the move before settling back off the highs. However, the gold was lucky to
have held ground considering the slack US economic numbers (which hint at slowed
physical demand or deflation) and it is also surprising that the gold avoided
weakness off the generally higher US Dollar. While soft US economic numbers
aren’t initially supportive to gold and silver prices, seeing the US economy
fail to recover, with soaring debt and trade issues could create a massive
flight to quality issue for gold and silver.
Technical Outlook
SILVER (MAR) 02/25/2005: The daily stochastics
have crossed over down which is a bearish indication. Momentum studies trending
lower from overbought levels is a bearish indicator and would tend to reinforce
lower price action. The market now above the 18-day moving average suggests the
longer-term trend has turned up. It is a slightly negative indicator that the
close was under the swing pivot. The next downside objective is 718.1. The next
area of resistance is around 748.6 and 759.0, while 1st support hits today at
728.1 and below there at 718.1.
GOLD (APR) 02/25/2005: Momentum studies are
trending higher but have entered overbought levels. The market now above the
18-day moving average suggests the longer-term trend has turned up. The market
could take on a defensive posture with the daily closing price reversal down.
The close over the pivot swing is a somewhat positive setup. The near-term
upside target is at 440.4. With a reading over 70, the 9-day RSI is approaching
overbought levels. The next area of resistance is around 438.0 and 440.4, while
1st support hits today at 433.4 and below there at 431.1.
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COPPER MARKET RECAP
2/24/2005
March Copper closed down 1.70 at 148.30. This was
2.30 up from the low and 1.10 off the high.
The copper market finished moderately lower but
at times was aggressively lower. We suspect that the soft durable goods report
had something to do with the weakness but we also get the sense from the trade
that the market is overdone technically and potentially a little overdone
fundamentally. One should also note that aluminum prices were down sharply
Thursday and that could hint at a vulnerability in the entire base metals arena.
With weak economics and rising energy prices it might be easy to whip up
physical demand concerns in copper.
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ENERGY MARKET RECAP
2/24/2005
April Crude Oil closed up 0.22 at 51.39. This was
0.89 up from the low and 0.66 off the high.
April Heating Oil closed down 0.65 at 142.96.
This was 2.31 up from the low and 3.74 off the high.
April Unleaded Gas finished down 0.58 at 142.34,
2.46 off the high and 2.44 up from the low.
April Natural Gas finished up 0.03 at 6.45, 0.17
off the high and 0.03 up from the low.
April Propane closed up 0.01 at 0.79. This was
equal to the low and equal to the high.
The energy complex managed another upward thrust
and managed to touch $52.50 in the May contract! The weekly inventory stats
figures were not that telling, as crude stocks at the API declined sharply but
gasoline stocks seem to have built enough to countervail the support derived
from the crude stocks change. With the Saudi Oil Minister predicting that the US
would see crude oil prices in a range of $40 to $50 in 2005, it would seem that
the market is accepting an entrenchment of higher oil prices. We also think that
the market is making more out of the cold weather in early March but for the
time being the bull track is dominating prices. Even natural gas rallied despite
the fact that gas stocks declined by a mere 88 bcf and the annual surplus of
stocks expanded rather sharply to 406 bcf as compared to the prior surplus of
328 bcf.
Technical Outlook
CRUDE OIL (APR) 02/25/2005: 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 next upside objective is 52.88. With a
reading over 70, the 9-day RSI is approaching overbought levels. The next area
of resistance is around 52.16 and 52.88, while 1st support hits today at 50.62
and below there at 49.79.
UNLEADED (APR) 02/25/2005: 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 could take on a defensive posture
with the daily closing price reversal down. The market’s close below the pivot
swing number is a mildly negative setup. The near-term upside objective is at
147.24. The next area of resistance is around 144.79 and 147.24, while 1st
support hits today at 139.89 and below there at 137.45.
HEATING OIL (APR) 02/25/2005: 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 daily closing price reversal down is a negative indicator for prices. The
market has a slightly positive tilt with the close over the swing pivot. The
next upside objective is 149.36. The market is approaching overbought levels
with an RSI over 70. The next area of resistance is around 145.98 and 149.36,
while 1st support hits today at 139.94 and below there at 137.27.
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CORN MARKET RECAP
2/24/2005
May Corn finished down 1/4 at 213 1/2, 1
1/4 off the high and 1 1/4 up from the low. December Corn closed up 1/2 at 236.
This was 1 1/4 up from the low and 3/4 off the high.
The early rally was led by a surge in soybean
values due to fears of crop losses in Brazil, but after a short-covering bounce,
a sell-off in soybeans helped push May corn to yesterday’s lows. Ideas that the
market is overbought and that recent increased movement of cash corn by
producers could trigger a sell-off helped trigger the light selling. News that
South Korea is tendering to buy 72,500 tons of corn from Brazil added to the
bearish demand tone, and traders seem nervous that the foundation of the current
rally off of the February lows was short-covering from funds. Basis was firm at
the gulf, as producer selling which was active this week slowed today. The USDA
indicated that producers would plant 1 million more corn acres this year as
compared with last year, which is less than current trade ideas. For the weekly
export sales report, released before the opening, traders are looking for
600,000-800,000 tons as compared with 786,000 tons last week. Support for May
corn is at 211 1/2 and 209 1/2 with resistance at 216 3/4 and 223.
Technical Outlook
CORN (MAY) 02/25/2005: 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. It is a slightly negative indicator that the
close was under the swing pivot. The near-term upside target is at 216. The next
area of resistance is around 214 3/4 and 216, while 1st support hits today at
212 1/4 and below there at 211.
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SOY COMPLEX RECAP
2/24/2005
May Soybeans finished down 8 1/2 at 574, 19 off
the high and 1 up from the low. November Soybeans closed down 10 at 581 1/2.
This was 1/2 up from the low and 18 off the high.
May Soymeal closed down 2.3 at 170.2. This was
0.2 up from the low and 5.8 off the high.
March Soybean Oil finished down 0.4 at 21.33,
0.56 off the high and 0.09 up from the low.
A dry trend in southern Brazil supported active
buying early in the session. Scattered showers are in the forecast for the
weekend, but traders are still concerned with areas which are expected to
receive little or no rain in the days just ahead, as stressful temperatures and
dry soils have traders looking for lower production. After a cooler, wetter
weekend, the weather turns warm and dry for early next week. It may take
significant losses to tighten the world balance sheets enough to raise concerns
and prompt a significant increase in coverage from end users. The CBOT raised
initial margin requirements for soybeans to $1,485 from the current $1,215,
effective tomorrow. The Census Crush Report was released early due to weather in
Washington DC, and the report showed January crush at 148.5 million bushels,
which was in line with trade expectations and down from 150.03 million bushels
in December. Oil stocks were 1.557 billion pounds from expectations near 1.548
billion, while meal stocks at mills were 338,504 tons from expectations near
290,000 tons. Basis at the gulf was firm as producer movement slowed after the
active producer selling so far this week. The USDA, at the annual Outlook
Conference today, indicated that soybean planted acreage for the coming season
would be down 2 million acres (2.6%) from last year. They also projected
production at 2.9 billion bushels. With beginning stocks at 440 million bushels,
ending stocks could rise significantly if usage does not increase from this
year’s 2.818 billion bushels. For the weekly export sales report, released
before the opening, traders are looking for soybean sales near 250,000-400,000
tons, meal at 50,000-100,000 tons and oil sales near 3,000-8,000 tons. The
outside day down after moving to the highest level since September 10th may be
seen as a bearish technical development. Resistance for May soybeans comes in at
584 and 598 with support at 568 1/2 and 561.
Technical Outlook
BEANS (MAY) 02/25/2005: Momentum studies are
trending higher but have entered overbought levels. The major trend could be
turning up with the close back above the 18-day moving average. 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 objective is at 598 1/2. The 9-day RSI over 70 indicates the market is
approaching overbought levels. The next area of resistance is around 584 and 598
1/2, while 1st support hits today at 564 and below there at 558 1/2.
MEAL (MAY) 02/25/2005: The daily stochastics gave
a bearish indicator with a crossover down. Stochastics turning bearish at
overbought levels will tend to support lower prices if support levels are
broken. The market now above the 18-day moving average suggests the longer-term
trend has turned up. The outside day down is somewhat negative. The close below
the 1st swing support could weigh on the market. The next downside target is
167.3. The next area of resistance is around 174.7 and 179.0, while 1st support
hits today at 168.9 and below there at 167.3.
BEANOIL (MAY) 02/25/2005: Rising stochastics at
overbought levels warrant some caution for bulls. 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 is a negative indicator for
prices. The market setup is somewhat negative with the close under the 1st swing
support. The next upside objective is 22.32. With a reading over 70, the 9-day
RSI is approaching overbought levels. The next area of resistance is around
21.88 and 22.32, while 1st support hits today at 21.20 and below there at 20.96.
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WHEAT MARKET RECAP
2/24/2005
May Wheat finished down 3 1/4 at 321 1/4, 4 3/4 off the high
and 3/4 up from the low. July Wheat closed down 3 1/4 at 327 3/4. This was 3/4
up from the low and 4 1/4 off the high.
Ideas that technical indicators have reached
excessively overbought levels and a lack of significant weather concerns for the
market helped trigger some light selling early in the session, but the bounce in
soybeans led by dry weather fears in Brazil helped to provide some support.
Taiwan bought 51,000 tons US wheat overnight and South Korea bought 20,000 tons
of US wheat. Traders were disappointed to hear that Pakistan may not need to
import the 100,000 tons that were previously expected for a tender, due to
improved crop conditions. The CBOT raised initial margin requirements for wheat
to $743 from the current $608 effective tomorrow. The EU sold 295,000 tons of
free market wheat for export at their weekly tender with 8 euros/tonne maximum
rebate. This is up 2 euros from last week and about what traders were looking
for. For the weekly export sales report, released before the opening, traders
are looking for 400,000-500,000 tons as compared with 623,200 tons last week.
May wheat support comes in at 317 and 314 with 325 1/4 and 332 as next
resistance.
Technical Outlook
WHEAT (MAY) 02/25/2005: 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 market’s close below
the pivot swing number is a mildly negative setup. The next upside target is 327
3/4. The next area of resistance is around 324 and 327 3/4, while 1st support
hits today at 318 1/2 and below there at 316 3/4.
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LIVE CATTLE RECAP
2/24/2005
April Live Cattle finished up 0.17 at 86.27, 0.45
off the high and 0.12 up from the low.
March Feeder Cattle closed up 0.35 at 99.07. This
was 0.32 up from the low and 0.32 off the high.
April cattle closed 17 higher on the session but
45 points off of the highs. Traders believe that cash markets will trade steady
to higher this week but so far there is little evidence that packers are too
worried about finding enough cattle to meet near-term needs. Boxed-beef cut-out
values at mid-session were up $.52 to $139.28 as compared with $141.99 last
week. Slaughter came in at 118,000 head from trade expectations for
116,000-120,000 head.
Technical Outlook
CATTLE (APR) 02/25/2005: Momentum studies are
declining, but have fallen to oversold levels. The market back below the 18-day
moving average suggests the longer-term trend could be turning down. The close
over the pivot swing is a somewhat positive setup. The next downside target is
now at 85.800. The next area of resistance is around 86.550 and 86.920, while
1st support hits today at 86.000 and below there at 85.800.
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LEAN HOGS RECAP
2/24/2005
April Lean Hogs finished down 0.52 at 74.90, 0.95
off the high and 0.05 up from the low.
March Pork Bellies closed up 0.20 at 86.77. This
was 0.87 up from the low and 0.22 off the high.
April hogs closed moderately lower after hitting
the highest level since January 26th and the technical reversal could attract
some selling on Friday. Ideas that the market is overbought and the premium of
futures to the cash market limited the buying early in the session and may have
helped trigger the late selling. Cash markets were steady today and pork values
were down sharply on Wednesday night which contributed to weaker packer demand
for new hogs and could attract less packer demand if pork values dip again. The
2-day lean index for the period ending February 22nd came in at 69.01, up.87 on
the session and up from 67.25 last week. Slaughter came in at 395,000 head from
trade expectations for 395,000-400,000 head.
Technical Outlook
HOGS (APR) 02/25/2005: The close under the 40-day
moving average indicates the longer-term trend could be turning down.
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 is an indication the longer-term trend has turned
positive. The downside closing price reversal on the daily chart is somewhat
negative. The market’s close below the pivot swing number is a mildly negative
setup. The next upside objective is 76.120. The next area of resistance is
around 75.370 and 76.120, while 1st support hits today at 74.400 and below there
at 74.150.
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COCOA MARKET RECAP
2/24/2005
May Cocoa finished up 29 at 1656, 2 off the high
and 52 up from the low.
The cocoa market flashed higher and reached the
highest level since early December. Apparently both the funds and small specs
were aggressive buyers and that is understandable given the chart resistance
violations. It would seem like the market is rushing to factor in the lagging
arrival rate as a de-facto crop loss and while that might be wrong one can’t
argue with the near term bullish tilt that is in control of the market place. It
is even more surprising that prices managed such an aggressive rise, considering
that NYBOT cocoa stocks increased by over 303,000 bags in the daily report that
was released after the close Thursday.
Technical Outlook
COCOA (MAY) 02/25/2005: Rising stochastics at
overbought levels warrant some caution for bulls. The market now above the
18-day moving average suggests the longer-term trend has turned up. The outside
day up and close above the previous day’s high is a positive signal. The
market’s close above the 2nd swing resistance number is a bullish indication.
The near-term upside objective is at 1697. The next area of resistance is around
1683 and 1697, while 1st support hits today at 1629 and below there at 1590.
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COFFEE MARKET RECAP
2/24/2005
May Coffee closed down 2.25 at 121.40. This was
2.00 up from the low and 5.20 off the high.
May coffee hit a contract high and a 5-year high
for the nearby futures before closing moderately lower on the day and below the
opening. The reversal could attract more technical selling on Friday with
technical indicators at extreme overbought levels. Funds were noted sellers but
not panic sellers with light profit-taking selling helping to pressure the
market late. London futures close higher and at a new two-year peak but the
close below the opening is a slightly bearish indicator. The lack of new bullish
news to fuel the rally may suggests some back and fill action could be in order.
Traders will monitor the Vietnam weather closely, however, as drought alerts and
water shortages in some areas could impact next year’s crop.
Technical Outlook
COFFEE (MAY) 02/25/2005: The market made a new
contract high on the rally. The daily stochastics have crossed over down which
is a bearish indication. 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 now above the 18-day moving average suggests
the longer-term trend has turned up. The market could take on a defensive
posture with the daily closing price reversal down. It is a slightly negative
indicator that the close was under the swing pivot. The next downside target is
115.05. The next area of resistance is around 125.00 and 129.40, while 1st
support hits today at 117.80 and below there at 115.05.
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SUGAR MARKET RECAP
2/24/2005
May Sugar closed down 0.14 at 9.16. This was 0.03
up from the low and 0.07 off the high.
May sugar closed 14 lower on the session and to
the lowest level since January 19th which is a significant concern to the longs
with speculators holding a record net long position of near 170,000 contracts in
the last traders report with options. After a wet January, areas of Sao Paulo
and Parana Brazil, the two top sugar producing states, have not received rain in
3 weeks. The Sugar and Ethanol Producers Association of Parana indicated
irreversible damage to the cane crop but the extent of the damage is still
unclear. Traders believe that the damage will be light if normal weather occurs
soon. However, another 10 days of dry weather could trigger increasing losses.
Before the dry weather, traders were looking for a record cane crop from Brazil
of near 5-8% over last year’s record. With the expiration of the March contract
on Monday, volatility could be significant in the next few sessions.
Technical Outlook
SUGAR (MAY) 02/25/2005: The market back below the
60-day moving average suggests the longer-term trend could be turning down.
Momentum studies trending lower at mid-range should accelerate a move lower if
support levels are taken out. 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 9.07. The next area of resistance is around 9.20 and
9.27, while 1st support hits today at 9.11 and below there at 9.07.
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COTTON MARKET RECAP
2/24/2005
May Cotton finished down 0.14 at 48.75, 0.45 off
the high and 0.95 up from the low.
The market closed slightly lower on the session
with trade house selling active early in the day and some light speculative long
liquidation selling. However, speculative buyers helped support the market near
last week’s highs and May cotton managed to close back above the lower opening.
For the weekly export sales report, released before the opening, traders are
looking for 225,000-250,000 bales as compared with 239,600 bales last week. For
shipments, traders look for 250,000-300,000 bales from 308,600 bales last week.
Exports for the year are projected to reach a record 13 million bales from 12.7
million projected in the January USDA report with expectations for China to be
an aggressive importer soon.
Technical Outlook
COTTON (MAY) 02/25/2005: 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 market tilt is
slightly negative with the close under the pivot. The next upside objective is
50.02. The next area of resistance is around 49.45 and 50.02, while 1st support
hits today at 48.05 and below there at 47.23.