Here’s Why Some Longs Banked Profits Today

Weakness in the other grains and lackluster
export sales news kept the selling trend in tact early in the session and by
mid-day, March corn was within 1 cent of the contract lows. Talk of hefty world
supply and fears that US producer selling might increase in the weeks just ahead
helped to pressure. Weekly export sales this morning came in at 762,800 tons as
compared with 700,000-900,000 tons expected. Cumulative sales have reached 51.9%
of the USDA forecast for the entire season as compared with 52.6% on average for
this time of the year. The International Grain Council revised world coarse
grain production higher by 7 million tonnes from their November forecast. World
ending stocks are expected to come in near 172 million tonnes for the 2004/2005
season from 137 million tonnes last year. Overnight, South Korea issued a tender
to buy 55,000 tonnes of optional origin corn. Daily average ethanol production
reached 232,000 barrels in November, 2004, the highest monthly level in the last
13 years and compared to 226,000 in October, 2004. November production was
38,000 barrels higher than year ago production at 196,000 barrels. Ethanol
stocks declined to 6.095 million barrels in November, compared to 6.282 million
barrels in October, 2004 and 5.848 million barrels November, 2003. Gulf basis
levels were lower this morning due to slack export demand. Resistance for March
corn comes in at 197 1/2 and 198 3/4 with support at 195 1/4 and 191.

Technical Outlook

CORN (MAR) 01/28/2005: The sell-off took the
market to a new contract low. A bearish signal was triggered on a crossover down
in the daily stochastics. Momentum studies are still bearish but are now at
oversold levels and will tend to support reversal action if it occurs. The
market back below the 18-day moving average suggests the longer-term trend could
be turning down. The gap down on the day session chart is bearish with more
selling pressure possible today. The market is in a bearish position with the
close below the 2nd swing support number. The next downside target is 193 3/4.
The next area of resistance is around 197 and 198 1/2, while 1st support hits
today at 194 1/2 and below there at 193 3/4.

 

SOY COMPLEX RECAP

1/27/2005

March Soybeans finished down 7 1/4 at 515 3/4, 3
1/4 off the high and 1/4 up from the low. May Soybeans closed down 7 1/4 at 514.
This was 1/2 up from the low and 3 1/2 off the high.

March Soymeal closed down 2.5 at 154.9. This was
0.1 up from the low and 2.1 off the high.

March Soybean Oil finished down 0.09 at 19.43,
0.04 off the high and 0.06 up from the low.

A weaker demand tone due to slack export and
crush news this morning along with the outlook for record Brazil crop for
harvest soon helped trigger a round of active speculative selling early in the
session. May, July and November soybeans hit new contract lows along with other
months and oil futures hit new contract lows across the board. The Brazil
government Agriculture agency (IBGE) for their third forecast for the season
raised their production forecast to 63.43 million tonnes, up 29% from last year.
Weekly export sales came in at 519,300 tons as compared with 600,000-800,000
tons expected. Cumulative sales have reached 82.1% of the USDA forecast for the
season as compared with 78.2% on average for this time of the year. For meal,
weekly sales were just 47,200 tons from 50,000-100,000 tons expected. Cumulative
sales have reached 66% of the USDA forecast for the season as compared with
63.1% on average for this time of the year. Oil sales came in at 16,700 tons
bringing the two-week total to 59,800 tons as compared with trade expectations
for 5,000-10,000 tons and 7,300 tons necessary each week to reach the USDA
projection. Cumulative oil sales have reached 55% of the USDA forecast for the
year as compared with 38.3% on average for this time of the year. For the Census
crush report, also released this morning, the December crush was pegged at
150.033 million bushels as compared with trade expectations near 151 million
bushels. November crush was 152 million and October was 155.8 million bushels.
Total oil stocks at the end of December were pegged at 1.29 billion pounds vs.
trade expectations at 1.295 billion pounds. Meal stocks were pegged at 271,306
tons from trade expectations for 230,000 tons and from 288,400 tons at the end
of November. Weekend rains in the forecast for some of the drier areas of
southern Brazil and Argentina added to the bearish tone. Resistance for March
soybeans comes in at 518 1/2 and 522 1/2 with support at 512 1/2 and 508 1/2.

Technical Outlook

BEANS (MAR) 01/28/2005: The daily stochastics
gave a bearish indicator with a crossover down. Daily stochastics declining into
oversold territory suggest the selling may be drying up soon. The close below
the 18-day moving average is an indication the longer-term trend has turned
down. The gap lower price action on the day session chart is a bearish indicator
for trend. The close below the 2nd swing support number puts the market on the
defensive. The next downside objective is now at 513. The next area of
resistance is around 517 1/2 and 520, while 1st support hits today at 514 and
below there at 513.

MEAL (MAR) 01/28/2005: A bearish signal was
triggered on a crossover down in the daily stochastics. 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 gap
lower on the day session chart is bearish and puts the market on the defensive.
The close below the 2nd swing support number puts the market on the defensive.
The next downside objective is 153.2. The next area of resistance is around
156.0 and 157.6, while 1st support hits today at 153.8 and below there at 153.2.

BEANOIL (MAR) 01/28/2005: The market made a new
contract low on the break. The daily stochastics have crossed over down which is
a bearish indication. Daily stochastics declining into oversold territory
suggest the selling may be drying up soon. The close below the 18-day moving
average is an indication the longer-term trend has turned down. The gap lower
price action on the day session chart is a bearish indicator for trend. It is a
slightly negative indicator that the close was lower than the pivot swing
number. The next downside target is now at 19.33. The next area of resistance is
around 19.48 and 19.52, while 1st support hits today at 19.38 and below there at
19.33.

 

WHEAT MARKET RECAP

1/27/2005

March Wheat finished down 5 3/4 at 289 1/2, 4 1/2 off the high
and 1 up from the low. May Wheat closed down 5 3/4 at 297 1/2. This was 1 up
from the low and 4 1/2 off the high.

Fears of increased export competition ahead and
hefty world supplies triggered weakness and new contract lows for wheat. Funds
were noted sellers of near 5000 contracts into the mid-session. The last
Commitment-of-Traders report with options showed that speculators already held a
record net short position as of January 18th and the market is down 8 cents from
this date. The EU confirmed a report last week that it had issued a tender to
export near 2 million tonnes of wheat using subsidies. Weekly export sales this
morning came in at 437,500 tons as compared with 400,000-500,000 tons expected.
Cumulative sales have reached 79.5% of the USDA forecast for the entire season
as compared with 71.4% on average for this time of the year. India Agriculture
representatives overnight indicated that the country is likely to have near 2-3
million tonnes of exportable surplus this season due to favorable production.
The International Grain Council revised world wheat production for the 2004/2005
season to 621 million tons from 554 million tonnes last season. World ending
stocks are expected to come in near 137 million tonnes from 125 million tonnes
last year. For the 2005/2006 season, they believe wheat production could fall
from this year’s record to near 599 million tons. In the last USDA world
Supply/Demand report, usage for the 2004/2005 season was pegged at 606.4 million
tons. March wheat support comes in at 287 and 284 1/2 with resistance at 292 1/4
and 295.

Technical Outlook

WHEAT (MAR) 01/28/2005: The market made a new
contract low on the break. Daily stochastics declining into oversold territory
suggest the selling may be drying up soon. The major trend has turned down with
the cross over back below the 18-day moving average. More selling pressure is
likely given yesterday’s gap lower price action on the day session chart. The
market is in a bearish position with the close below the 2nd swing support
number. The next downside objective is 285. The next area of resistance is
around 292 1/4 and 295 3/4, while 1st support hits today at 286 3/4 and below
there at 285.

 

LIVE CATTLE RECAP

1/27/2005

February Live Cattle finished up 0.12 at 89.25,
0.10 off the high and 0.80 up from the low.

January Feeder Cattle closed down 0.12 at 104.17.
This was 0.07 up from the low and equal to the high.

The early weakness was triggered by talk of
weaker beef prices and talk of more cattle in the showlist this week but a lack
of cash trade and expectations of snow and rain in the central and southern
plains over the weekend helped to support the market into the mid-session. The
market also received some short-covering on ideas that potential legal action
might trigger a supply surprise soon if actions are successful at stalling the
plan to open the Canadian border on March 7th. In addition, the new USDA
Secretary of Agriculture asked Japan to set a specific date for resuming
purchases of US beef. Boxed-beef cut-out values were down $2.16 to $146.46 at
mid-session as compared with $146.46 one week ago. For the Cattle Inventory
report on Friday, All cattle and calves as of January 1st are expected to come
in near 100.7% of last year (range 100-101). The 2004 calf crop is expected near
99.4% of last year (range 99-100%).

Technical Outlook

CATTLE (FEB) 01/28/2005: A negative indicator was
given with the downside crossover of the 9 & 18 bar moving average. 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 daily closing price reversal up on
the daily chart is somewhat positive. It is a mildly bullish indicator that the
market closed over the pivot swing number. The next downside target is now at
88.200. The next area of resistance is around 89.700 and 89.970, while 1st
support hits today at 88.820 and below there at 88.200.

 

LEAN HOGS RECAP

1/27/2005

February Lean Hogs finished down 0.37 at 74.20,
0.10 off the high and 0.55 up from the low.

February Pork Bellies closed down 0.45 at 94.07.
This was 0.62 up from the low and 0.22 off the high.

The market pushed sharply lower early in the
session due to fears that weaker packer profit margins would trigger lower cash
markets into the weekend and early next week. With futures at a premium to the
cash market, weakness in the cash market could trigger follow-through technical
selling as the last Commitment-of-Traders report showed a record high net long
position of the fund trade. High weights, weaker pork product values on
Wednesday night and bearish technical signals added to the bearish tone. The
2-Day Lean index for the period ending January 25th was up.41 to 74.37 as
compared with 73.12 one week previous.

Technical Outlook

HOGS (FEB) 01/28/2005: Momentum studies are still
bearish but are now at oversold levels and will tend to support reversal action
if it occurs. 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 lower than the pivot swing number. The next downside target
is 73.450. The next area of resistance is around 74.520 and 74.720, while 1st
support hits today at 73.900 and below there at 73.450.

 

COCOA MARKET RECAP

1/27/2005

March Cocoa finished up 2 at 1577, 19 off the
high and 12 up from the low.

The cocoa market managed to extend the recent
upward thrust early in the action but the market wasn’t able to hold all off the
gains. Once again the Dollar served to undermine the rally attempt in cocoa but
we also think that the improvement in the fundamental condition is really the
underlying element behind the recent gains and that should mean that a moderate
portion of the January gains could be expected to remain in place. West African
weather saw a few light rain events on Thursday (some claimed that ended the
dryness threat to the mid crop) but with temps returning to above normal into
the weekend and other traders still worried about dryness into the remainder of
the mid crop flowering period, the bulls might have a little added incentive.

Technical Outlook

COCOA (MAR) 01/28/2005: 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
higher than the pivot swing number, the market is in a slightly bullish posture.
The near-term upside target is at 1609. The next area of resistance is around
1592 and 1609, while 1st support hits today at 1562 and below there at 1548.

 

COFFEE MARKET RECAP

1/27/2005

March Coffee closed down 1.90 at 103.20. This was
0.15 up from the low and 1.80 off the high.

May coffee was hit hard by speculative profit
taking as fund traders still hold a large net long position while market
conditions had become over bought. The London market also weakened under
pressure from origin sales which added to the negative tone in the NY market. At
their monthly auction, Brazil’s government sold nearly all of the 40,000 bags
offered, while around 4.3 million bags are left in the government warehouse.
German coffee imports fell 37.1% in November, 2004 vs the month prior and down
6.2% from November, 2003. Premium coffee buyers such as Starbucks, plan to buy
more coffee beans this year which along with lower supplies should keep coffee
prices in a longer term uptrend.

Technical Outlook

COFFEE (MAR) 01/28/2005: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The market now above the 18-day moving average suggests the longer-term
trend has turned up. The market’s close below the 1st swing support number
suggests a moderately negative setup for today. The next upside target is
105.55. The next area of resistance is around 104.15 and 105.55, while 1st
support hits today at 102.25 and below there at 101.70.

 

SUGAR MARKET RECAP

1/27/2005

March Sugar closed down 0.08 at 9.22. This was
0.10 up from the low and 0.08 off the high.

May sugar closed 7 lower on the session today
after yesterday’s run-up to new contract highs, while March sugar came in 11
lower. The market opened weaker on some small spec selling, but the funds
reportedly came in at the lows and helped bring the market back to within 2
cents of yesterday’s high. Fund buying has been behind much of the markets
recent move, but anticipated demand from India and Pakistan are providing
underlying support. May sugar support comes in at 942 with 958 and 969 as
resistance.

Technical Outlook

SUGAR (MAR) 01/28/2005: 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. It is a
slightly negative indicator that the close was lower than the pivot swing
number. The next upside target is 9.39. The next area of resistance is around
9.30 and 9.39, while 1st support hits today at 9.13 and below there at 9.04.

 

COTTON MARKET RECAP

1/27/2005

March Cotton finished down 2.92 at 43.86, 3.24
off the high and 0.03 up from the low.

The cotton market pushed sharply lower in active
trade as the early bounce failed to attract much in the way of new buyers. On
the move under Wednesday’s lows, the selling trend accelerated and more
sell-stops were hit on the move under this weeks and last weeks lows. Weekly
export sales came in at 282,000 bales as compared with 420,000-300,000 bales
expected. China was the largest buyer at 54,100 bales with Mexico second at
41,900 bales. Traders seemed a bit disappointed that there was not a larger
sales total to China. Cumulative sales have reached 75.1% of the USDA forecast
for the entire season as compared with 78.6% on average for this time of the
year. Weekly shipments hit 263,500 bales. The US National Cotton Council will
release its survey of US cotton planting intentions for the 2005 crop on Friday
after the close. Traders are looking for a planted acreage number near 14.24
million acres (range 14-14.4) as compared with 13.76 million last year. A 50%
retracement point of the November to January rally leaves 45.48 as a key pivot
for May cotton with additional key retracement support at 44.60.

Technical Outlook

COTTON (MAR) 01/28/2005: The market back below
the 60-day moving average suggests the longer-term trend could be turning down.
Negative momentum studies in the neutral zone will tend to reinforce lower price
action. The market back below the 18-day moving average suggests the longer-term
trend could be turning down. There could be some early pressure today given the
market’s negative setup with the close below the 2nd swing support. The next
downside target is now at 41.40. The next area of resistance is around 45.49 and
47.93, while 1st support hits today at 42.23 and below there at 41.40.