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While crop conditions were seen as neutral
against expectations, the cold weather in the longer-term forecast models along
with confirmation in the reports of a slow maturity pace helped provide
underlying support. A lack of deliveries against the September contract and
steady cash basis levels helped to provide some support as well. The weekly crop
progress reports showed that crops rated in good to excellent condition were
down 1% to 70% as compared with 46% last year and 61% as the 14-year average for
this time of the year. Crops which have reached the dented stage in Iowa was
posted at 39% by August 29th as compared with 59% on average and Minnesota was
just 6% dented as compared with 44% on average. Taiwan bought 56,000 tons of US
corn. December corn support moves up to 236 1/4 and 234 3/4 with next resistance
at 240 1/4 and 245 1/4.

Technical Outlook

CORN (DEC) 09/01/2004: Negative momentum studies
in the neutral zone will tend to reinforce lower price action. The close below
the 9-day moving average is a negative short-term indicator for trend. It is a
mildly bullish indicator that the market closed over the pivot swing number. The
next downside objective is now at 232. The next area of resistance is around 240
and 241 1/4, while 1st support hits today at 235 1/2 and below there at 232.

 

SOY COMPLEX RECAP

8/31/2004

September Soybeans finished up 4 3/4 at 627 1/4,
3/4 off the high and 11 1/4 up from the low. November Soybeans closed up 6 3/4
at 627 1/4. This was 15 1/4 up from the low and 3/4 off the high.

December Soymeal closed up 1 at 181.2. This was
4.2 up from the low and 0.7 off the high.

December Soybean Oil finished up 0.47 at 25.2,
0.05 off the high and 0.57 up from the low.

A lack of new news regarding the cold weather
front expected for next week, concerns with the weak cash markets and ideas that
the market has already “priced-in” declining crop conditions led to the early
weakness with speculative selling turning a bit more active. Gulf and country
cash basis bids were slightly lower. A lack of deliveries against the September
contracts for oil, meal and soybeans along with concerns with the slow pace of
maturity for the crops in the northern and western cornbelt helped to limit the
losses. Traders were looking for a 1-2% decline in crop conditions (rated good
to excellent) for yesterday’s weekly crop progress report and conditions dropped
3% to 64%. The Brazil Vegetable Oils Industry Association sees the Brazil
2004/2005 crop production at 61.5 million tons as compared with 50.6 million
tons this past season. Exports are expected to reach 23 million tons from 19.8
million expected for the current crop season. The recent USDA production
forecast is at 66 million tons. Resistance for November soybeans closed at the
highest level since July 20th with next resistance at 629 and 633 1/2 with
support at 616 and 608.

Technical Outlook

BEANS (NOV) 09/01/2004: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The close above the 9-day moving average is a positive short-term
indicator for trend. With the close higher than the pivot swing number, the
market is in a slightly bullish posture. The near-term upside objective is at
639 1/2. The next area of resistance is around 635 1/4 and 639 1/2, while 1st
support hits today at 619 1/4 and below there at 607 3/4.

MEAL (DEC) 09/01/2004: The crossover up in the
daily stochastics is a bullish signal. Positive momentum studies in the neutral
zone will tend to reinforce higher price action. A positive signal for trend
short-term was given on a close over the 9-bar moving average. The daily closing
price reversal up on the daily chart is somewhat positive. With the close higher
than the pivot swing number, the market is in a slightly bullish posture. The
next upside objective is 185.2. The next area of resistance is around 183.6 and
185.2, while 1st support hits today at 178.8 and below there at 175.5.

BEANOIL (DEC) 09/01/2004: Momentum studies are
trending higher but have entered overbought levels. The close above the 9-day
moving average is a positive short-term indicator for trend. Market positioning
is positive with the close over the 1st swing resistance. The near-term upside
target is at 25.69. With a reading over 70, the 9-day RSI is approaching
overbought levels. The next area of resistance is around 25.51 and 25.69, while
1st support hits today at 24.89 and below there at 24.45.

 

WHEAT MARKET RECAP

8/31/2004

September Wheat finished up 6 1/2 at 309 3/4, 1/2 off the high
and 6 1/4 up from the low. December Wheat closed up 6 1/2 at 322 3/4. This was 6
1/2 up from the low and 1/4 off the high.

Lighter than expected deliveries and some
positive export news along with strength in the other grains helped support
short-covering and new buying in wheat. The market closed at a 5-day high after
a successful test of the August lows. Deliveries came in at 326 lots as compared
with trade expectations at 500-1000 contracts. Pakistan bought 442,000 tons with
142,000 coming as US wheat and 300,000 from Australia. Taiwan also bought 43,140
tons of US wheat and Tunisia bought 150,000 tons which was thought to have come
from the Black Sea region. A cold and wet 6-10 day forecast for the spring wheat
belt is seen as a supportive factor if harvest progress is delayed or if quality
is diminished. Support for December wheat comes in at 317 and 314 1/4 with 330
1/4 and 333 1/2 (40-day moving average) as next resistance.

Technical Outlook

WHEAT (DEC) 09/01/2004: The upside crossover of
the 9 & 18 bar moving average is a positive signal. A bullish signal was given
with an upside crossover of the daily stochastics. Positive momentum studies in
the neutral zone will tend to reinforce higher price action. The market’s close
above the 9-day moving average suggests the short-term trend remains positive.
With the close over the 1st swing resistance number, the market is in a
moderately positive position. The near-term upside objective is at 327 3/4. The
next area of resistance is around 326 and 327 3/4, while 1st support hits today
at 319 1/2 and below there at 314 1/2.

 

LIVE CATTLE RECAP

8/31/2004

October Live Cattle closed up 0.22 at 84.65. This
was 1.62 up from the low and 0.10 off the high.

October Feeder Cattle finished down 0.62 at
109.42, 0.32 off the high and 0.92 up from the low.

The market pushed sharply lower early in the
session but managed to close higher after the August contract went off of the
board with what traders believed was more than 100 contracts open. As a result,
traders perceive a demand for deliverable cattle and short-covering helped
support the higher close on the session for October cattle (up 22) which was up
162 contracts from the lows of the day. Boxed beef cutout values (600-750
choice) were up $.66 at mid-session to $136.76 from $140.40 last week at this
time. Follow-through technical buying after yesterday’s positive action added to
the positive tone. Slaughter came in at 123,000 head as compared with trade
expectations at 123,000-128,000 head. Poor margins could be keeping packer
demand weak.

Technical Outlook

CATTLE (OCT) 09/01/2004: The daily stochastics
gave a bullish indicator with a crossover up. The stochastic indicator is rising
from oversold levels, which is bullish and should support higher prices. A
positive signal for trend short-term was given on a close over the 9-bar 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 85.970. The next
area of resistance is around 85.500 and 85.970, while 1st support hits today at
83.800 and below there at 82.550.

 

LEAN HOGS RECAP

8/31/2004

October Lean Hogs closed up 0.95 at 65.97. This
was 1.27 up from the low and 0.07 off the high.

February Pork Bellies finished down 1.02 at
92.42, 1.17 off the high and 0.40 up from the low.

October hogs closed sharply higher on the session
for the second day in a row with active speculative buying as the discount of
futures to the cash market helping to support. The CME 2-day lean index for the
period ending August 27th was down 42 cents from the previous session to $73.23
as compared with 76.30 on August 18th. Traders are looking for the weekly cold
storage report to show an out-movement of 1.0-1.5 million pounds. Slaughter came
in at 399,000 head as compared with trade expectations at 395,000-400,000 head.
Packer demand seems strong as a result of the positive profit margins which
should help keep producers current with marketings.

Technical Outlook

HOGS (OCT) 09/01/2004: Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The close above
the 9-day moving average is a positive short-term indicator for trend. With the
close over the 1st swing resistance number, the market is in a moderately
positive position. The near-term upside target is at 67.020. The next area of
resistance is around 66.620 and 67.020, while 1st support hits today at 65.320
and below there at 64.350.

 

COCOA MARKET RECAP

8/31/2004

December Cocoa finished down 33 at 1686, 6 off
the high and 30 up from the low.

Cocoa prices once again attempted to washout but
in the end they managed to recovery to within striking distance of the prior
sessions low. Apparently the small spec players moved into the buy cocoa around
the lows and that served to lift prices. The London market suggested that trade
buyers were involved in the bounce and that means that the buying was
diversified. In other words, a number of players apparently see value in
December cocoa down around the $1,650 level. Private forecast for the 2004-2005
cocoa market called for a deficit of 39,000 tons (from Calyon) might be a little
smaller deficit than the market has been factoring off the dry weather and that
could explain the general weakness in prices.

Technical Outlook

COCOA (DEC) 09/01/2004: A bearish signal was
triggered on a crossover down in the daily stochastics. Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. The close below the 9-day moving average is a negative short-term
indicator for trend. The market setup is somewhat negative with the close under
the 1st swing support. The next downside target is 1644. The next area of
resistance is around 1704 and 1716, while 1st support hits today at 1668 and
below there at 1644.

 

COFFEE MARKET RECAP

8/31/2004

December Coffee closed up 0.50 at 72.60. This was
0.50 up from the low and 0.25 off the high.

The coffee market inched higher in quiet trade
supported by light short-covering. The cash market does not appear to be in a
position to work sharply lower at this time as supplies are tight in Colombia
and Brazil is on the tail end of the harvest. The new crop harvest in Vietnam
does not start up until November; about two weeks past normal and fund traders
already hold a hefty net short position. Weather is favorable for the tail end
(last 15%) of the Brazil harvest. The close back over the 40-day moving average
may be seen as positive.

Technical Outlook

COFFEE (DEC) 09/01/2004: The cross over and close
above the 40-day moving average is an indication the longer-term trend has
turned positive. A crossover down in the daily stochastics is a bearish signal.
Momentum studies trending lower from overbought levels is a bearish indicator
and would tend to reinforce lower price action. The close below the 9-day moving
average is a negative short-term indicator for trend. The close over the pivot
swing is a somewhat positive setup. The next downside objective is now at 71.80.
The next area of resistance is around 72.95 and 73.25, while 1st support hits
today at 72.25 and below there at 71.80.

 

SUGAR MARKET RECAP

8/31/2004

October Sugar closed up 0.26 at 7.99. This was
0.24 up from the low and 0.01 off the high.

October sugar closed sharply higher with both
trade and fund buying noted and the move to a new 11-session high helped fuel
the buying with stops. Steady talk that India is buying cargoes of sugar and
that the country could loosen import restrictions helped to support the tone but
there is still no confirmation of either of these rumors. Export basis for
September shipment from Santos Brazil weakened to $45/$43 under LIFFE October
futures from $41/tonne under last week. The market closed just above the 50%
retracement level of the August break which could be a signal of a resumption of
the uptrend.

Technical Outlook

SUGAR (OCT) 09/01/2004: Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The market’s
close above the 9-day moving average suggests the short-term trend remains
positive. There could be more upside follow through since the market closed
above the 2nd swing resistance. The next upside objective is 8.18. The next area
of resistance is around 8.11 and 8.18, while 1st support hits today at 7.87 and
below there at 7.69.

 

COTTON MARKET RECAP

8/31/2004

October Cotton finished up 2.90 at 53.80, 0.10
off the high and 2.60 up from the low.

The market closed sharply higher finding support
from potential damage to the southeast crop and fears that the next hurricane
path (Frances) could move into cotton production areas. Trade house selling
helped to limit the gains for part of the session but fund traders were active
buyers late in the day. The predicted path of the storm is likely to have a
significant impact on the market direction late this week; especially with the
market closed on Monday. Support for December cotton moves up to 53.44 with
56.80 (50% retracement of the contract high to contract low break) as next
resistance.

Technical Outlook

COTTON (OCT) 09/01/2004: Rising stochastics at
overbought levels warrant some caution for bulls. A positive signal for trend
short-term was given on a close over the 9-bar moving average. The gap upmove on
the day session chart is a bullish indicator for trend. 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 near-term upside
objective is at 55.87. With a reading over 70, the 9-day RSI is approaching
overbought levels. The next area of resistance is around 55.14 and 55.87, while
1st support hits today at 52.45 and below there at 50.48.