Are You Trading The Grains? Read This.

The close below the opening and more than 5 cents
off of the highs could generate technical selling on the opening. News that
Asian rust was found in Louisiana was seen as bullish to soybeans and triggered
a surge in short-covering from speculators. This is the first case on the
continental US. The USDA also believes that soy rust treatment could add 15-20%
to production costs so the impact on corn could be a tendency to shift some
soybean acreage over to corn. The average trade estimate for corn production for
Friday’s USDA report came in at 11.671 billion bushels (range 11.573-11.75) as
compared with 11.613 billion last month. For ending stocks, the average trade
estimate for the 2004/2005 season is 1.794 billion bushels (range 1.71-1.884) as
compared with 1.691 billion last month and 958 million bushels for the 2003/2004
season. News that China corn export prices were adjusted higher and that US corn
is now competitive on the world market in spite of the high freight had a firm
tone in the corn market into the opening even before the Asia rust news. Support
for December corn comes in at 197 1/4 and 197 with resistance at 199 and 201
1/4.

Technical Outlook

CORN (DEC) 11/11/2004: Daily stochastics are
trending lower but have declined into oversold territory. A negative signal for
trend short-term was given on a close under the 9-bar moving average. With the
close higher than the pivot swing number, the market is in a slightly bullish
posture. The next downside objective is now at 193 3/4. The next area of
resistance is around 201 1/4 and 205 1/2, while 1st support hits today at 195
1/4 and below there at 193 3/4.

 

SOY COMPLEX RECAP

11/10/2004

January Soybeans finished up 14 1/2 at 525, 16
off the high and 9 up from the low. March Soybeans closed up 16 3/4 at 533 1/2.
This was 11 up from the low and 14 1/2 off the high.

December Soymeal closed up 4 at 153.9. This was
2.7 up from the low and 3.6 off the high.

December Soybean Oil finished up 0.34 at 20.79,
0.26 off the high and 0.09 up from the low.

The surge higher was triggered by the USDA
confirmation of Asia rust in Louisiana; the first case ever reported in the
continental US. With the crop already harvested, the impact for this year’s
production is mute but with speculators holding a record net short position and
a report on Friday, short-covering pulled the market higher. November 2005
soybeans led the rally as next years crop will be threatened with lower yields
due to the presence of rust and due to lower planted acreage. The USDA has
estimated that the fungus will cost US farmers between $630 million and $1.3
billion in the first year. The USDA also believes that soy rust treatment could
add 15-20% to production costs. Traders believe that the 2003/2004 crop losses
in Brazil were near 4.5 million tons of the crop of 52.6 million tons. In
addition, the first case of Asia rust for the 2004/2005 crop in Brazil was
reported overnight and the soybean crop has just emerged from the ground. Rumors
that China is in the market for US soybeans continues to provide some support as
well. Taiwan bought 56,000 tons of US soybeans overnight. The average trade
estimate for Friday’s USDA Crop Production report for soybean production is at
3.137 billion bushels (range 3.107-3.167) as compared with 3.107 billion last
month. For the supply/demand report Friday, traders look for soybean ending
stocks for the 2004/2005 season to come in near 468 million bushels (range
410-556) as compared with 405 million last month and 112 million bushels for the
2003/2004 season. January soybean support comes in at 520 1/4 and 517 1/2 with
resistance at 541 and 548.

Technical Outlook

BEANS (JAN) 11/11/2004: The crossover up in the
daily stochastics is a bullish signal. Rising from oversold levels, daily
momentum studies would support higher prices, especially on a close above
resistance. The close above the 9-day moving average is a positive short-term
indicator for trend. The gap up on the day session chart gave a bullish
indicator and more follow through could be seen this session. The market has a
bullish tilt coming into today’s trade with the close above the 2nd swing
resistance. The near-term upside objective is at 551 3/4. The next area of
resistance is around 537 1/2 and 551 3/4, while 1st support hits today at 512
1/2 and below there at 501 3/4.

MEAL (DEC) 11/11/2004: 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. Follow through buying looks likely if the market can hold
yesterday’s gap on the day session chart. 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 target is at
160.4. The next area of resistance is around 157.0 and 160.4, while 1st support
hits today at 150.8 and below there at 147.9.

BEANOIL (DEC) 11/11/2004: Momentum studies
trending lower at mid-range should accelerate a move lower if support levels are
taken out. The close above the 9-day moving average is a positive short-term
indicator for trend. Follow through buying looks likely if the market can hold
yesterday’s gap on the day session chart. The market setup is supportive for
early gains with the close over the 1st swing resistance. The next downside
objective is now at 20.49. The next area of resistance is around 20.96 and
21.18, while 1st support hits today at 20.62 and below there at 20.49.

 

WHEAT MARKET RECAP

11/10/2004

December Wheat finished down 1 at 303 1/2, 6 1/2 off the high
and 1/2 up from the low. March Wheat closed down 1 3/4 at 315 3/4. This was 1/2
up from the low and 6 1/4 off the high.

The strength in soybeans was not enough to move
the market over Tuesday’s highs and the weak close leaves the market vulnerable
to weakness into the USDA report on Friday. The market found overflow support
from the other grain markets with news of Asian rust reported in Louisiana.
Futures had a firm tone ahead of the USDA announcement on rust on news that
Pakistan will import an additional 500,000 tons of wheat in an attempt the ease
internal prices. With a poor crop this season, Pakistan has already booked
920,000 tons of wheat imports. Traders also await news on a tender for up to
200,000 tons of wheat from Iraq. South Korea bought 21,500 tons of US wheat
overnight. French wheat officials revised their forecast for ending stocks down
to 4.16 million tons from 4.23 million as last months forecast. For Friday’s
USDA report, traders look for wheat ending stocks to come in near 554 million
bushels (range 495-592) as compared with 569 million last month and 547 million
bushels last year. December wheat support comes at 303 and 300 1/2 with
resistance at 305 1/4 and 311 1/2.

Technical Outlook

WHEAT (DEC) 11/11/2004: Momentum studies are
declining, but have fallen to oversold levels. The market’s short-term trend is
negative as the close remains below the 9-day moving average. The market tilt is
slightly negative with the close under the pivot. The next downside target is
298. The next area of resistance is around 307 and 312, while 1st support hits
today at 300 and below there at 298.

 

LIVE CATTLE RECAP

11/10/2004

December Live Cattle closed up 1.17 at 83.65.
This was 1.30 up from the low and 0.30 off the high.

January Feeder Cattle finished up 1.50 at 101.87,
0.12 off the high and 1.37 up from the low.

February cattle opened lower and pushed to the
lowest level since May 19th before turning higher on the session and taking out
the range of the past three-sessions with a sweeping reversal and strong close.
Higher beef prices and a limit-up move in hogs helped to provide support to the
market but traders are still concerned that cash cattle could trade lower this
week. The strength in the beef market gave traders more confidence that the beef
market had made a seasonal low and could move higher over the near-term.
Boxed-beef prices were up $.99 to $132.56 at mid-session as compared with
$134.18 last week at this time. Cash cattle traded in Nebraska ay $81.00 live
and $127 dressed but some feedlots passed on the $81.00 bids in hopes of higher
prices later in the week. This was steady to $1.00 lower from last week.
Slaughter came in at 121,000 head as compared with trade expectations of
120,000-127,000 head.

Technical Outlook

CATTLE (DEC) 11/11/2004: The crossover up in the
daily stochastics is a bullish signal. Rising from oversold levels, daily
momentum studies would support higher prices, especially on a close above
resistance. The market’s short-term trend is positive on the close above the
9-day moving average. With the close over the 1st swing resistance number, the
market is in a moderately positive position. The near-term upside target is at
85.000. Consider buying pull-backs since daily studies are bullish. The next
area of resistance is around 84.450 and 85.000, while 1st support hits today at
82.870 and below there at 81.820.

 

LEAN HOGS RECAP

11/10/2004

December Lean Hogs closed up 2.00 at 73.90. This
was 1.20 up from the low and equal to the high.

February Pork Bellies finished up 1.57 at 102.05,
0.75 off the high and 1.55 up from the low.

December hogs closed limit up and February hogs
sharply higher as continued strength in the cash index, higher pork cut-out
values and surging ham prices helped support renewed speculative buying. While
funds are building a net long position, keep in mind that the last COT report
with options showed small speculators holding a near record net short position
and stops were activated on a resumption of the uptrend this week. The CME 2-Day
Lean Index for the period ending November 8th was reported at 75.38, up $.61
from the previous session and up from 71.21 the previous week. February hogs
typically trade at a 500-700 point premium to the cash market at this time of
the year but was still at a discount into the close. While cash markets were
called lower, reports of steady to higher trade at various locations helped to
support. The surge in pork values may have helped improve packer profit margins
and packer demand for live inventory. The weak US dollar has also helped US pork
remain competitive on the international market. Slaughter came in at only
376,000 head as compared with trade expectations of 380,000-395,000 head.

Technical Outlook

HOGS (DEC) 11/11/2004: The crossover up in the
daily stochastics is a bullish signal. Studies are showing positive momentum but
are now in overbought territory, so some caution is warranted. A positive signal
for trend short-term was given on a close over the 9-bar moving average. The gap
up on the day session chart gave a bullish indicator and more follow through
could be seen this session. There could be more upside follow through since the
market closed above the 2nd swing resistance. The near-term upside objective is
at 74.800. The market is becoming somewhat overbought now that the RSI is over
70. The next area of resistance is around 74.500 and 74.800, while 1st support
hits today at 73.320 and below there at 72.420.

 

COCOA MARKET RECAP

11/10/2004

December Cocoa finished down 105 at 1701, 124 off
the high and 6 up from the low.

Cocoa prices fell back aggressively despite
little overall change in the political climate at the Ivory Coast. One might
have expected cocoa prices to extend recent gains considering that some players
think that the unrest hasn’t been effectively factored into prices yet and
because of report of cocoa pod borer problems in Indonesia. Even more surprising
in the face of the break Wednesday is the fact that 11 more people were killed
in ethnic fighting. Just to finish off the lack of bullish impetus Wednesday the
cocoa market saw US September cocoa imports rise by 3.4% from the prior month
and 113% from year ago levels and yet that didn’t support prices.

Technical Outlook

COCOA (DEC) 11/11/2004: A crossover down in the
daily stochastics is a bearish signal. Momentum studies are trending lower from
high levels which should accelerate a move lower on a break below the 1st swing
support. The close above the 9-day moving average is a positive short-term
indicator for trend. The market setup is somewhat negative with the close under
the 1st swing support. The next downside objective is now at 1601. The next area
of resistance is around 1766 and 1860, while 1st support hits today at 1636 and
below there at 1601.

 

COFFEE MARKET RECAP

11/10/2004

December Coffee closed up 1.35 at 81.35. This was
0.25 up from the low and 0.75 off the high.

The coffee market gapped higher to a new 5-week
high as a surge in London prior to the opening set the stage for renewed
speculative buying. Fund traders seem to be adding to their net long position in
New York but were caught holding a hefty net short in London. January coffee in
London is already up 16% from the October 29th lows. Traders remain optimistic
that the Brazil 2005/2006 crop will come in near the 30-35 million bags level
from near 40-42 million this year. Mexico coffee export for October were 99,030
bags which is down 13.6% from last year. October is the first month of the new
marketing year. Producer selling from Brazil remains light with talk of
tightness developing for higher quality coffee.

Technical Outlook

COFFEE (DEC) 11/11/2004: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The market’s close above the 9-day moving average suggests the
short-term trend remains positive. Follow through buying looks likely if the
market can hold yesterday’s gap on the day session chart. The market has a
bullish tilt coming into today’s trade with the close above the 2nd swing
resistance. The next upside objective is 82.45. With a reading over 70, the
9-day RSI is approaching overbought levels. The next area of resistance is
around 81.85 and 82.45, while 1st support hits today at 80.90 and below there at
80.50.

 

SUGAR MARKET RECAP

11/10/2004

March Sugar closed up 0.09 at 8.60. This was 0.16
up from the low and 0.03 off the high.

Trade house buying emerged to support a 10 point
gain in March futures. Traders still await evidence of increased cash market
activity and the trade house buying was enough to support some increased
speculative buying. While traders see the record Brazil cane crop as a negative
force, more of the cane could be diverted to ethanol production as exports and
domestic usage of ethanol continue to rise. A reversal from lower to higher on
the session in London added to the positive tone. Indonesia officials expect
2004 sugar production to increase to 2.006 million tons which might be enough to
limit imports in 2005. Indonesia is expected to issue import permits for near
250,000 tonnes of white sugar or about 50% of the 2004 level. Syria bought
26,000 tons of white sugar. London was down early in the day due to low prices
reported for the Syria tender.

Technical Outlook

SUGAR (MAR) 11/11/2004: Daily momentum studies
are on the rise from low levels and should accelerate a move higher on a push
through the 1st swing resistance. A positive signal for trend short-term was
given on a close over the 9-bar moving average. The outside day up and close
above the previous day’s high is a positive signal. Market positioning is
positive with the close over the 1st swing resistance. The near-term upside
objective is at 8.75. Short-term indicators suggest buying pullbacks today. The
next area of resistance is around 8.69 and 8.75, while 1st support hits today at
8.51 and below there at 8.38.

 

COTTON MARKET RECAP

11/10/2004

December Cotton finished down 0.39 at 43.65, 0.90
off the high and 0.30 up from the low.

After a higher opening, March cotton came under
pressure from steady speculative selling. The surge higher in grains supported
the early gains but the market was unable to even challenged Tuesday’s highs
before the speculative selling emerged to drive the market to a new contract
low. Soybeans were reported by news of soybean Asian rust reported in Louisiana.
The USDA projects that soybean production costs in the US could jump 15-20% in
order to combat the rust and this could drive delta soybean producers to plant
more cotton and less soybeans. The average trade estimate for Friday’s USDA Crop
Production report for cotton production is at 21.51 million bales (range
21.06-22) as compared with 21.54 million last month. For the supply/demand
report Friday, traders look for cotton ending stocks for the 2004/2005 season to
come in near 6.7 million bales (range 5.85-7.8) as compared with 6.7 million
last month and 3.51 million bales for the 2003/2004 season.

Technical Outlook

COTTON (DEC) 11/11/2004: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. A
negative signal for trend short-term was given on a close under the 9-bar moving
average. The market tilt is slightly negative with the close under the pivot.
The next downside target is now at 42.60. The next area of resistance is around
44.24 and 45.00, while 1st support hits today at 43.05 and below there at 42.60.