$80 Oil? Read On…
BOND MARKET RECAP
3/3/2005
March Bonds finished down 0-02 at 112-22, 0-09
off the high and 0-02 up from the low.
March 10 Yr Treasury Notes finished down 0-020 at
110-220, 0-080 off the high and 0-010 up from the low.
Bonds traded in a tight range Thursday as
the economic reports were not surprising enough to move the market ahead of the
critical February payroll report tomorrow. The reports that were out today
support a Feb payroll increase in the vicinity of 220,000. Initial claims
dropped by 1,000, the ISM non-Manufacturing index rose to 59.8 with the
employment component showing a jump to 59.6, the highest level since the index
was created. Productivity in the 4th quarter was revised up to 2.1% while unit
labor costs were lowered to +1.3% from +2.3% preliminary. Another spike higher
in crude oil had little impact on bond prices.
Technical Outlook
BONDS (MAR) 03/04/2005: 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 market’s close below the pivot swing number is a mildly negative setup. The
next downside target is 112-13. The market is approaching oversold levels on an
RSI reading under 30. The next area of resistance is around 112-28 and 113-04,
while 1st support hits today at 112-17 and below there at 112-13.
TNOTES (MAR) 03/04/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
close under the 18-day moving average indicates the longer-term trend could be
turning down. The downside closing price reversal on the daily chart is somewhat
negative. It is a slightly negative indicator that the close was under the swing
pivot. The next downside objective is 110-150. Some caution in pressing the
downside is warranted with the RSI under 30. The next area of resistance is
around 110-275 and 111-015, while 1st support hits today at 110-185 and below
there at 110-150.
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STOCK INDICES RECAP
3/3/2005
March S&P finished up 0.3 at 1209.9, 6.6 off the
high and 5.1 up from the low.
March S&P E-Mini closed up 0.5 at 1210. This was
5.5 up from the low and 6.75 off the high.
March Dow closed up 14 at 10826. This was 59 up
from the low and 44 off the high.
Stock prices were pulled in both directions
Thursday as prices were supported by economic reports showing high productivity,
low labor costs and rising service sector employment during February and
pressured by another surge in energy prices. The decline in initial claims and
the rise in the employment component of the ISM non-Manufacturing Index suggest
a rise in payrolls of +220,000 is possible. However another spike higher in oil
prices kept the bulls on a short leash as rising energy costs could begin to cut
into corporate profit margins.
Technical Outlook
S&P 500 (MAR) 03/04/2005: 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 lower than the pivot swing number. The near-term upside target is at
1221.97. The next area of resistance is around 1215.75 and 1221.97, while 1st
support hits today at 1204.05 and below there at 1198.58.
SP EMINI (MAR) 03/04/2005: 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. The market’s
close below the pivot swing number is a mildly negative setup. The next upside
objective is 1222.56. The next area of resistance is around 1216.12 and 1222.56,
while 1st support hits today at 1203.88 and below there at 1198.07.
NASDAQ (MAR) 03/04/2005: The daily stochastics
have crossed over down which is a bearish indication. Momentum studies trending
lower at mid-range should accelerate a move lower if support levels are taken
out. The close below the 18-day moving average is an indication the longer-term
trend has turned down. It is a slightly negative indicator that the close was
under the swing pivot. The next downside objective is 1486.38. The next area of
resistance is around 1528.75 and 1545.37, while 1st support hits today at
1499.25 and below there at 1486.38.
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CURRENCY MARKET RECAP
3/3/2005
March US Dollar finished up 21 at 8331, 9 off the
high and 31 up from the low.
March Euro finished down 0.25 at 131.12, 0.38 off
the high and 0.13 up from the low.
March Euro Dollar closed up 0.0025 at 96.9925.
This was 0.0025 up from the low and 0.005 off the high.
March Canadian Dollar closed down 0.22 at 80.46.
This was 0.44 up from the low and 0.03 off the high.
March British Pound finished down 0.56 at 190.63,
0.48 off the high and 0.13 up from the low.
March Swiss closed down 0.51 at 84.74. This was
0.15 up from the low and 0.35 off the high.
March Japanese Yen closed down 0.49 at 95.05.
This was 0.13 up from the low and 0.41 off the high.
Thursday’s economic reports gave a boost to the
Dollar which prompted more short covering ahead of Friday’s key employment
report. The reports that were out today support a Feb payroll increase in the
vicinity of 220,000. Initial claims dropped by 1,000, the ISM non-Manufacturing
index rose to 59.8 with the employment component showing a jump to 59.6, the
highest level since the index was created. Productivity in the 4th quarter was
revised up to 2.1% while unit labor costs were lowered to +1.3% from +2.3%
preliminary. A strong jobs report could be a critical turning point for the
Dollar when combined with strong US economic growth and rising interests.
Technical Outlook
YEN (MAR) 03/04/2005: A bearish signal was
triggered on a crossover down in the daily stochastics. 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. The market is in a bearish position with the close below
the 2nd swing support number. The next downside target is 94.58. The next area
of resistance is around 95.32 and 95.65, while 1st support hits today at 94.78
and below there at 94.58.
EURO (MAR) 03/04/2005: Momentum studies are
trending lower from high levels which should accelerate a move lower on a break
below the 1st swing support. The cross over and close above the 18-day moving
average is an indication the longer-term trend has turned positive. The market
could take on a defensive posture with the daily closing price reversal down.
The market tilt is slightly negative with the close under the pivot. The next
downside objective is 130.68. The next area of resistance is around 131.37 and
131.69, while 1st support hits today at 130.87 and below there at 130.68.
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PRECIOUS METALS RECAP
3/3/2005
April Gold closed down 3 at 430.8. This was 0.7
up from the low and 3.5 off the high.
March Silver finished down 0.078 at 7.229, 0.066
off the high and 0.019 up from the low.
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Gold closed lower today as the US Dollar
recovered on optimism going into Friday morning’s jobs report. The trade is
looking for a net gain of 220,000 in non-farm payrolls out of that report. A
strong number would support the dollar and therefore encourage gold longs to
exit. Key support for April gold is around 430, and a move below there could
send the market back into its 420-430 consolidation range, where it spent most
of January.
Technical Outlook
SILVER (MAY) 03/04/2005: Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. The cross over and close above the 18-day moving average is an
indication the longer-term trend has turned positive. It is a slightly negative
indicator that the close was under the swing pivot. The next downside target is
now at 717.8. The next area of resistance is around 731.5 and 737.8, while 1st
support hits today at 721.5 and below there at 717.8.
GOLD (APR) 03/04/2005: The close below the 60-day
moving average is an indication the longer-term trend has turned down. Momentum
studies trending lower from overbought levels is a bearish indicator and would
tend to reinforce lower price action. The cross over and close above the 18-day
moving average indicates the longer-term trend has turned up. The swing
indicator gave a moderately negative reading with the close below the 1st
support number. The next downside target is 427.3. Daily studies pointing down
suggests selling minor rallies. The next area of resistance is around 432.9 and
435.7, while 1st support hits today at 428.7 and below there at 427.3.
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COPPER MARKET RECAP
3/3/2005
March Copper closed down 0.20 at 147.50. This was
0.40 up from the low and 0.70 off the high.
Copper rallied early today over optimism about
the strong pace of demand, but it broke in the second half of the session as the
dollar gained strength to close near unchanged on the day. The strong pace of
China’s demand and fund (speculative) buying has been the dominant force in this
bull market. Reports earlier this week of China’s demand growth slipping to 9%
in 2005 from 12% in 2004 has tempered the market’s bullishness. A weaker Dollar
tends to support Dollar-based commodities, like copper, because it makes those
commodities appear cheaper for holders of other currencies. Today the dollar
rallied late on some optimism going into tomorrow morning’s US non-farm payrolls
report, putting some downward pressure on copper.
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ENERGY MARKET RECAP
3/3/2005
April Crude Oil closed up 0.52 at 53.57. This was
0.71 up from the low and 1.63 off the high.
April Heating Oil closed down 1.77 at 149.08.
This was 1.38 up from the low and 3.67 off the high.
April Unleaded Gas finished up 2.37 at 150.75,
3.75 off the high and 3.25 up from the low.
April Natural Gas finished down 0.06 at 6.66,
0.14 off the high and 0.02 up from the low.
April Propane closed up 0.03 at 0.82. This was
0.01 up from the low and equal to the high.
A flurry of fund and speculative buying continued
dive energy markets sharply higher on concerns that supplies will not keep pace
with rising world demand. On-going refinery production problems sent unleaded
gas prices surging as there are concerns that surplus stocks now could quickly
be whittled away if refinery disruptions occur during the upcoming high demand
period. OPEC’s Acting Secretary-General said he could not rule out a temporary
spike in crude oil prices to $80/barrel if there is a major supply disruption.
While he said the probability of this happening is low, this type of comment
from OPEC will keep traders on edge. Libya’s oil minister said OPEC would not
consider hiking production at the March meeting.
Technical Outlook
CRUDE OIL (APR) 03/04/2005: The market rallied to
a new contract high. 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. With the
close higher than the pivot swing number, the market is in a slightly bullish
posture. The next downside target is now at 51.46. The 9-day RSI over 70
indicates the market is approaching overbought levels. The next area of
resistance is around 54.73 and 56.14, while 1st support hits today at 52.40 and
below there at 51.46.
UNLEADED (APR) 03/04/2005: The market made a new
contract high on the rally. 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 close over the
pivot swing is a somewhat positive setup. The near-term upside objective is at
157.87. The 9-day RSI over 70 indicates the market is approaching overbought
levels. The next area of resistance is around 154.25 and 157.87, while 1st
support hits today at 147.25 and below there at 143.88.
HEATING OIL (APR) 03/04/2005: The market rallied
to a new contract high. 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 market tilt is slightly negative
with the close under the pivot. The near-term upside target is at 154.70. The
market is becoming somewhat overbought now that the RSI is over 70. The next
area of resistance is around 151.60 and 154.70, while 1st support hits today at
146.56 and below there at 144.61.
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CORN MARKET RECAP
3/3/2005
May Corn finished down 1 at 218, 1/4 off
the high and 2 up from the low. December Corn closed down 3/4 at 239 1/4. This
was 1 3/4 up from the low and 1/2 off the high.
Weakness in soybeans and overbought ideas helped
to trigger the weak tone for the opening and funds were noted sellers of near
3500 contracts by mid-session but the selling slowed in the afternoon. The
weekly export sales report, released before the opening, showed corn sales at
875,600 tons as compared with trade expectations at 650,000-900,000 tons.
Cumulative sales have reached 61.2% of the USDA forecast for the season as
compared with 62% on average for this time of the year. The surge higher in
soybean prices over the past few weeks has helped to ease fears of a significant
jump in corn planted acreage in the US for the coming year as the sharp rally
could give producers an incentive to plant soybeans. Deliveries were 1,263
contracts and a continued flow of deliveries has traders nervous over near-term
corn demand. Traders will monitor the Taiwan tender for 56,000-60,000 tons of
corn from the US or Argentina closely to see if the recent rally has made US
corn less competitive on the world market. In addition, South Korea is tendering
for up to 55,000 of optional origin corn and traders are nervous that China will
receive the business instead of the US. Japan bought 110,000 tons of US corn
overnight. Support for May corn comes in at 216 and 213 1/2 with resistance at
219 and 221 1/2.
Technical Outlook
CORN (MAY) 03/04/2005: Stochastics turning
bearish at overbought levels will tend to support lower prices if support levels
are broken. The cross over and close above the 18-day moving average is an
indication the longer-term trend has turned positive. It is a slightly negative
indicator that the close was under the swing pivot. The next downside objective
is 215 1/2. The next area of resistance is around 219 and 219 3/4, while 1st
support hits today at 217 and below there at 215 1/2.
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SOY COMPLEX RECAP
3/3/2005
May Soybeans finished unchanged at 627 1/4, 3/4
off the high and 10 3/4 up from the low. November Soybeans closed down 4 1/4 at
619 3/4. This was 7 3/4 up from the low and 1 1/4 off the high.
May Soymeal closed up 0.7 at 186.9. This was 3.4
up from the low and 0.1 off the high.
March Soybean Oil finished down 0.15 at 22.85,
0.08 off the high and 0.38 up from the low.
The market managed an 11 cent rally late in the
session to close unchanged for the May contract. Solid export sales were offset
by ideas that the market is just too overbought and by the upcoming harvest of a
record crop from Brazil early in the day which led to hefty losses but fund
selling dried up by mid-session. While there is no rain in the forecast for the
dry areas of southern Brazil into the middle of next week, the crop is close to
ready for harvest. The weekly export sales report, released before the opening,
showed soybean sales at 651,700 tons as compared with trade expectations at
300,000-400,000 tons. Cumulative sales have reached 91.3% of the USDA forecast
for the season as compared with 85.9% on average for this time of the year.
Rumors that China may have bought 1-2 cargoes of US soybeans for shipment out of
the Pacific Northwest helped provide some underlying support but traders assume
that China demand will shift to Brazil soon. Meal sales were just 37,500 tons as
compared with expectations at 50,000-100,000 tons. Cumulative sales have reached
74% of the USDA forecast for the season as compared with 68.9% on average for
this time of the year. Oil sales were 7400 tons from expectations for
5,000-10,000 tons. The Brazil Vegetable Oils Industry Association cut their
forecast for Brazil production to 58.3 million tonnes yesterday and Informa
Economics this morning pegged the Brazil crop at just 56.3 million tons as
compared with the last USDA forecast at 63 million tons. Deliveries against
March soybeans were 489 contracts this morning which added to the bearish tone.
Resistance for May soybeans comes in at 631 and 638 with support at 620 and 618.
Technical Outlook
BEANS (MAY) 03/04/2005: 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 market has a
slightly positive tilt with the close over the swing pivot. The next upside
target is 636 1/4. The market is approaching overbought levels with an RSI over
70. The next area of resistance is around 633 and 636 1/4, while 1st support
hits today at 621 1/2 and below there at 613 1/4.
MEAL (MAY) 03/04/2005: 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 has a slightly positive tilt with the close over the
swing pivot. The next upside target is 191.1. The market is approaching
overbought levels with an RSI over 70. The next area of resistance is around
190.1 and 191.1, while 1st support hits today at 186.7 and below there at 184.2.
BEANOIL (MAY) 03/04/2005: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. 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 lower than the pivot swing number. The next upside objective is 23.34.
The 9-day RSI over 70 indicates the market is approaching overbought levels. The
next area of resistance is around 23.19 and 23.34, while 1st support hits today
at 22.75 and below there at 22.47.
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WHEAT MARKET RECAP
3/3/2005
May Wheat finished down 2 1/2 at 338, 1 off the high and 3 1/2
up from the low. July Wheat closed down 2 1/2 at 344 3/4. This was 3 3/4 up from
the low and 1 1/4 off the high.
Fears that the export pace will slow dramatically
over the near-term due to the recent jump in prices along with concerns with the
extreme overbought readings for traditional technical indicators helped to
pressure the market early in the session. Funds were noted sellers of near 3500
contracts into the mid-session but July futures managed to bounce nearly 4 cents
off of the lows to close slightly lower on the day. Concerns about future
exports have been a mainstay in wheat for the past several months but the export
pace continues to exceed expectations. The weekly export sales report, released
before the opening, showed wheat sales at 507,800 tons as compared with trade
expectations at 300,000-450,000 tons. Cumulative sales have reached 87.4% of the
USDA forecast for the season as compared with 79.5% on average for this time of
the year. Weekly sales need to average 254,600 tons per week to reach the USDA
projection. At their weekly tender, Japan bought 130,000 tons of wheat with
45,000 of the total from the US. South Korea bought 20,500 tons of US wheat
overnight. Deliveries against the March contract were light again this morning
at just 55 contracts. The EU granted a 10 euro per tonne refund on 451,750
tonnes at their weekly export tender which might be seen as a bearish
development for US exports. May wheat support comes in at 334 and 326 3/4 with
338 3/4 and 344 as resistance.
Technical Outlook
WHEAT (MAY) 03/04/2005: 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’s close below the pivot swing number is a mildly
negative setup. The next upside target is 341 3/4. The next area of resistance
is around 340 1/4 and 341 3/4, while 1st support hits today at 335 3/4 and below
there at 333.
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LIVE CATTLE RECAP
3/3/2005
April Live Cattle finished up 1.90 at 88.70, 0.07
off the high and 1.10 up from the low.
March Feeder Cattle closed up 2.30 at 102.62.
This was 1.37 up from the low and 0.07 off the high.
With futures at a discount to the cash market
ahead of the border opening with Canada, news that the Canadian cattle will not
be allowed into the US on the March 7th date helped trigger aggressive buying
from commercial traders and speculators. April futures closed 190 higher at
88.70. Cash cattle in the panhandled traded $3.00 higher at $90.00 which added
to the bullish tone for the market. Commercial buyers who were counting on
increased supply were forced into the market to cover needs, especially with the
big discount to the cash market. Boxed-beef cut-out values at mid-session were
up $.15 to $141.55 as compared with $139.26 last week. Slaughter came in at
118,000 head from trade expectations for 116,000-120,000 head.
Technical Outlook
CATTLE (APR) 03/04/2005: The major trend could be
turning up with the close back above the 60-day moving average. Positive
momentum studies in the neutral zone will tend to reinforce higher price action.
The cross over and close above the 18-day moving average indicates the
longer-term trend has turned up. If yesterday’s gap higher on the day session
chart holds, additional buying could develop this session. 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 upside objective
is 89.600. The next area of resistance is around 89.270 and 89.600, while 1st
support hits today at 88.120 and below there at 87.270.
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LEAN HOGS RECAP
3/3/2005
April Lean Hogs finished up 1.45 at 76.10, 0.50
off the high and 0.55 up from the low.
March Pork Bellies closed down 0.65 at 88.70.
This was 0.15 up from the low and 2.20 off the high.
April hogs closed sharply higher on the session
finding support from higher cash trade and from expectations for less beef
competition for the spring due to a lack of Canadian cattle. Cash hogs traded
$1.00 higher at many locations as compared with trade expectations for a steady
market. The surge higher in pork cut-out values on Wednesday afternoon led by
the ham market gave packers more confidence to pay-up in the cash market. The
2-day lean index for the period ending March 1st came in at 70.33, down.24 on
the session but up from 69.75 last week. Slaughter came in at 387,000 head from
trade expectations for 384,000-396,000 head.
Technical Outlook
HOGS (APR) 03/04/2005: The cross over and close
above the 40-day moving average indicates the longer-term trend has turned up.
Daily stochastics have risen into overbought territory which will tend to
support reversal action if it occurs. The cross over and close above the 18-day
moving average is an indication the longer-term trend has turned positive. A
positive setup occurred with the close over the 1st swing resistance. The
near-term upside objective is at 77.120. The next area of resistance is around
76.620 and 77.120, while 1st support hits today at 75.600 and below there at
75.050.
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COCOA MARKET RECAP
3/3/2005
May Cocoa finished up 9 at 1729, 13 off the high
and 24 up from the low.
Cocoa closed stronger today on fund buying,
anxiety over labor unrest in the Ivory Coast, and further evidence of cocoa’s
slow arrival pace. The latest estimate from exporters puts cocoa arrivals into
Ivory Coast ports at 876,980 metric tons as of February 27th versus 984,551 for
the same period last year. This lends further evidence that Ivory Coast cocoa
production is down this year. Cocoa farmers in the Ivory Coast struck as
promised today, setting up roadblocks to stop getting cocoa to ports. The effect
on the flow of beans is expected to be minimal because of how late in the season
it is occurring, but it raises anxiety nonetheless.
Technical Outlook
COCOA (MAY) 03/04/2005: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The cross over and close above the 18-day moving average indicates the
longer-term trend has turned up. The close over the pivot swing is a somewhat
positive setup. The near-term upside objective is at 1763. The market is
approaching overbought levels with an RSI over 70. The next area of resistance
is around 1747 and 1763, while 1st support hits today at 1711 and below there at
1690.
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COFFEE MARKET RECAP
3/3/2005
May Coffee closed up 1.50 at 123.05. This was
0.20 up from the low and 1.85 off the high.
May coffee closed 150 higher on the session but
for the second session in a row, a failed test of the highs could signal the
need for a near-term technical correction to the downside. The market is still
under the negative influence of the daily reversal from a contract high on
February 24th and from the weekly reversal from a 5-year peak for the week
ending February 25th. London shot higher for the second session in a row to the
highest level in nearly 5 year for the nearby futures. Fears of crop damage in
Vietnam, the wide premium of acabica over robusta and aggressive fund buying
supported London. India prices are inching higher as local producers are holding
stocks in anticipation of higher prices ahead. The 2005/2006 harvest is underway
and with expectations for a production total near 4.3 million bags from 4.67
million last year. The Honduras Coffee Institute projected 2004/2005 exports at
near 2.7 million bags, down 25% from last year due to lower production.
Technical Outlook
COFFEE (MAY) 03/04/2005: 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
indicates the longer-term trend has turned up. It is a mildly bullish indicator
that the market closed over the pivot swing number. The next downside target is
121.45. The next area of resistance is around 124.05 and 125.50, while 1st
support hits today at 122.05 and below there at 121.45.
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SUGAR MARKET RECAP
3/3/2005
May Sugar closed down 0.06 at 8.98. This was 0.05
up from the low and 0.05 off the high.
May sugar closed at the lowest level since
January 12th which leaves futures vulnerable to more long liquidation selling
over the near-term as speculators were holding a hefty net long position in the
last traders report. The close under psychological support adds to the bearish
tone. Traders are looking for significant buying interest from Russia and China
if the market pulls back much more and India is also expected to buy another 1
million tons or so 3 in the next 7 months. China internal prices are rising as
the difference between import and domestic prices is getting closer to a point
where it makes economic sense to import. The US sold 68,800 tonnes of white
sugar at their weekly tender at a maximum rebate of 39.898 euros. Traders were
looking for 50,000-110,000 tonnes. Russian internal prices are also on the rise
and an import campaign could begin soon with traders looking for 2.5-3.0 million
tons in imports for the season ending in October. Some estimates are beginning
to come in above 3 million tons.
Technical Outlook
SUGAR (MAY) 03/04/2005: 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. The swing indicator gave a
moderately negative reading with the close below the 1st support number. The
next downside target is now at 8.88. The next area of resistance is around 9.03
and 9.08, while 1st support hits today at 8.93 and below there at 8.88.
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COTTON MARKET RECAP
3/3/2005
May Cotton finished up 0.33 at 50.52, 0.08 off
the high and 1.17 up from the low.
After initial follow-through technical selling
dragged May cotton down nearly 85 points on the day, minor support held and
trade house and commercial buying supported the late rally to close 33 higher on
the session and back over psychological resistance at 50.00. The weekly export
sales report, released before the opening, showed cotton sales at 197,200 bales
as compared with trade expectations at 150,000-200,000 bales. Cumulative sales
have reached 82.6% of the USDA forecast for the season as compared with 88% on
average for this time of the year. With soaring polyester prices, improving
demand for cotton and government subsides, mill demand is better than expected
as mill profitability is supporting better than expected commercial buying.
China was the most active buyer in the sales report at 38,600 bales for the
week. Export shipments came in at 288,200 bales from trade expectations for
300,000-320,000 bales. Turkey, China and Indonesia moved the most cotton last
week.
Technical Outlook
COTTON (MAY) 03/04/2005: A bearish signal was
triggered on a crossover down in the daily stochastics. 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 cross over and
close above the 18-day moving average indicates the longer-term trend has turned
up. The daily closing price reversal up is a positive indicator that could
support higher prices. With the close higher than the pivot swing number, the
market is in a slightly bullish posture. The next downside target is now at
49.00. The next area of resistance is around 51.14 and 51.49, while 1st support
hits today at 49.90 and below there at 49.00.