Copper Explodes!

A warmer weather forecast into next week for the
Midwest, kept selling pressure on the market but volume was light and fund
selling seemingly subsided from yesterday’s active pace. Ideas that “big crops
get bigger” has kept the psychology bearish, as many traders are already
expecting even higher yields than yesterday’s USDA forecast. While traders look
for warmer weather into next week, some areas of the northern cornbelt are still
1-2 weeks behind a normal maturity pace and the 6-10 day calls for above normal
rains and a return to below normal temperatures by late next week and that could
begin to foster the early frost talk. Short-term technical indicators remain in
an oversold condition and traders mostly expected the Commitment-of-Traders
report for this afternoon to show an ongoing hefty net short position by the
speculators. Support for December corn comes in at 226 and 225, with resistance
at 231 and 232 1/2.

Technical Outlook

#CORN (DEC) 08/16/04: The daily stochastic’s gave
a bearish indicator with a crossover down. The next downside objective is now at
225. The market’s close below the pivot swing number is a mildly negative setup.
Market resistance comes in at 231 today, with support at 225. The market’s
short-term trend is negative as the close remains below the 9-day moving
average.

 

SOY COMPLEX RECAP

8/13/2004

September Soybeans finished down 3 3/4 at 586
1/4, 3 3/4 off the high and 5 1/4 up from the low. November Soybeans closed down
4 1/2 at 580 3/4. This was 5 3/4 up from the low and 3 3/4 off the high.

August Soymeal closed up 3.5 at 198.5. This was
7.5 up from the low and 8.5 off the high.

August Soybean Oil finished down 0.43 at 23.57,
0.43 off the high and 0.27 up from the low.

November Soybeans closed 18 1/4 cents higher on
the week after hitting the lowest level since mid-October on Wednesday. The
higher close leaves futures potentially vulnerable to short-covering if there is
a triggering factor. December Meal closed 2.60 higher on the week with December
Oil up 98. The outlook for above normal temperatures for early next week along
with unexpected deliveries against soybeans and products on the last day of
trade helped to trigger the early break. After closing 50 1/2 cents higher
yesterday for August soybeans, deliveries of 30 contracts overnight helped to
ease the buying enthusiasm. Overnight strength at the China exchange and in
Malaysia for palm oil helped to provide some underlying support but talk of the
overbought condition after yesterday’s surge higher was enough to ease the
buying and increase the spec selling. While there are some soybeans in the
delta, processors in Iowa pushed bids up by 15 cents to 90 over November in an
attempt to pull old crop soybeans away from producers. Deliveries on meal
totaled 142 contracts but a strong stopper took all 142. Oil deliveries were 179
contracts. Oil is finding some underlying support for cold weather fears on oil
yields for the northern Midwest and into Canada for canola. While traders look
for warmer weather into next week, some areas of the southern Illinois need
rains soon and the 6-10 day calls for good rains but concentrated in the
northern cornbelt. In addition, a below normal temperature trend could develop
late next week. August soybeans expired at noon at 652, down 35 1/2 cents on the
session. November soybean support comes in at 575 and 570 with 589 1/2 and 612
as next resistance.

Technical Outlook

#SOYBEANS (NOV) 08/16/04: It is a slightly
negative indicator that the close was lower than the pivot swing number. The
next area of resistance is around 585 1/2 and 589 3/4, while 1st support hits
today at 576 and below there at 570 3/4. The market’s close above the 9-day
moving average suggests the short-term trend remains positive. Positive momentum
studies in the neutral zone will tend to reinforce higher price action. The next
upside target is 589 3/4.

MEAL (DEC): Daily momentum studies are on the
rise from low levels and should accelerate a move higher on a push through the
1st swing resistance. The near-term upside objective is at 179.5. First
resistance comes in at 177.2, with support at 173.4. The market’s short-term
trend is positive on a close above the 9-day moving average. The market’s close
below the pivot swing number is a mildly negative setup.

BEAN OIL (DEC): The market’s close above the
9-day moving average suggests the short-term trend remains positive. Positive
momentum studies in the neutral zone will tend to reinforce higher price action.
The next upside target is 22.45. It is a slightly negative indicator that the
close was lower than the pivot swing number. Daily swing resistance is found at
22.31 and above there at 22.45. Support should be encountered at 21.93 and
21.69.

 

WHEAT MARKET RECAP

8/13/2004

September Wheat finished unchanged at 299 1/2, 1 1/2 off the
high and 1 1/2 up from the low. December Wheat closed down 1/2 at 313 1/2. This
was 1 1/4 up from the low and 2 off the high.

With relative strength readings under 22 and the
oversold condition of the market basis the Commitment-of-Traders report, shorts
are vulnerable to do some covering if the is a reason but with a focus on
production and a lack of weather problems from key producing areas of the world,
the market seems to lack a reason to cover. December wheat closed 18 3/4 cents
lower on the week but the inside trading session on Friday after contract lows
on Thursday could be a sign of a loss in downside momentum. The lower opening in
spite of news that Egypt bought 60,000 tons of US soft white wheat indicates a
focus on the supply news from the USDA report. South Korea also bought 19,500
tons overnight. Traders expect the Commitment-of-Traders report this afternoon
to show a hefty net short position from fund traders and short-term technical
indicators are showing an oversold condition. Cash basis is quiet with producer
selling slow due to recent lower prices. The next support for December wheat
comes in at 311 1/2 and then 307 1/2 with 315 and 318 3/4 as resistance.

Technical Outlook

#WHEAT (DEC) 08/16/04: It is a slightly negative
indicator that the close was lower than the pivot swing number. Look for
near-term support at 311 1/2 and below there at 310 1/4, with resistance levels
at 314 3/4 and 316 3/4. The market’s close below the 9-day moving average is an
indication the short-term trend remains negative. Momentum studies are
declining, but have fallen to oversold levels. The next downside target is 310
1/4. The 9-day RSI under 30 indicates the market is approaching oversold levels.

 

LIVE CATTLE RECAP

8/13/2004

October Live Cattle closed up 2.27 at 89.80. This
was 1.05 up from the low and 0.25 off the high.

October Feeder Cattle finished up 2.07 at 114.55,
0.65 off the high and 1.05 up from the low.

Cattle futures closed sharply higher today after
a gap higher opening started the session off strong. Reports of higher cash
cattle trade ($84-$85) late yesterday improved the trade psychology after lower
packer profit margins had left many traders skeptical that they’d see stronger
cash cattle prices this week. The market was also encouraged by encouraging
comments from USDA representatives coming out of the National Cattlemen’s Beef
Association meeting that US exports to Japan may come sooner than expected.
Boxed beef cutout values were down $0.41 at mid-session to $137.27 as compared
with $137.98 last week at this time. Weekly beef production was 487.1 million
pounds, up 3% from last week. Today’s estimated cattle slaughter came in at
116,000 head as compared with trade expectations at 119,000 to 128,000 head.

Technical Outlook

#CATTLE (OCT) 08/16/04: The daily stochastics
have crossed over up which is a bullish indication. The next upside target is
90.90. 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. Support should be encountered at 89.15 and below there at 88.30. Market
resistance is at 90.45 and then again at 90.90. The gap upmove on the day
session chart is a bullish indicator for trend. The market’s close above the
9-day moving average suggests the short-term trend remains positive. The cross
over and close above the 40-day moving average indicates the longer-term trend
has turned up.

 

LEAN HOGS RECAP

8/13/2004

October Lean Hogs closed up 1.52 at 68.32. This
was 1.12 up from the low and 0.27 off the high.

February Pork Bellies finished up 1.80 at 95.15,
0.45 off the high and 1.80 up from the low.

Hogs closed strong today. The expiring August
contract was supported by its discount to the cash lean index, while the
deferred contracts gained on primarily fund buying. A stronger cattle market and
an escalating bird flu crisis in Asia also supported the market. Cash hogs were
reported weaker today and packing plants are said to be well stocked and not
very aggressive bidders for next week. August bellies found trade today after
being limit down two days in a row. They closed 50 lower today after trading in
a wide range either side of yesterday’s close. The 2-day lean index for the
period ending August 11th was 79.53, down 14 cents from the previous day but up
from 79.49 the week before. Today’s estimated slaughter came in at 378,000 head,
which was above the top end of expectations ranging from 360,000 to 375,000.

Technical Outlook

#HOGS (OCT) 08/16/04: The market’s close above
the 2nd swing resistance number is a bullish indication. Resistance levels comes
in at 69.02 and 69.52 today, while support is around 67.62 and then 66.72. The
market’s short-term trend is negative as the close remains below the 9-day
moving average. The major trend could be turning up with the close back above
the 40-day moving average. Momentum studies trending lower at mid-range should
accelerate a move lower if support levels are taken out. The next downside
objective is now at 66.72.

 

COCOA MARKET RECAP

8/13/2004

September Cocoa finished up 11 at 1627, 6 off the
high and 23 up from the low.

The cocoa market was mostly higher for the
session and might have been partially supported by a sharp decline in the US
Dollar, which in turns makes US cocoa prices attractive to international buyers.
The cocoa market did trade on both sides of unchanged but finished the session
with a positive tilt. When the Press notes heavy spread trade action, as a
primary component of the trade for the day, that means that the fundamental and
technical condition is pretty quiet. It would still seem like the political
situation at the Ivory Coast is tending toward the bear camp but the bulls are
still not ready to give up on the weather threat.

Technical Outlook

COCOA (SEP) 08/16/04 The market has a slightly
positive tilt with the close over the swing pivot. Cocoa should run into
resistance at 1642 and above there at 1652 with support at 1613 and 1594.
Negative momentum studies in the neutral zone will tend to reinforce lower price
action. The next downside target is 1593.75.

 

COFFEE MARKET RECAP

8/13/2004

September Coffee closed up 0.05 at 65.60. This
was 0.50 up from the low and 0.30 off the high.

The only positive for coffee market Friday were
reports that US imports in June rose by 5.7% and were up 15.3% from a year ago
June. However, a lack of a supply threat for the tail end of the Brazil crop
would seem to leave the market in a weak posture. Some traders suggested that
the weekly COT report could show the funds short in excess of 18,000 contracts
and that could discourage further selling. However, the trade also think that
the small specs remain long over 5,000 contracts and that certainly could give
the market additional stop loss selling.

Technical Outlook

COFFEE (SEP) 8/16/04 The market tilt is slightly
negative with the close under the pivot. The 9-day RSI under 30 indicates the
market is approaching oversold levels. Daily stochastics are showing positive
momentum from oversold levels which should reinforce a move higher if near-term
resistance is taken out. The near-term upside objective is at 66.35. The Coffee
contract should run into resistance at 66.00 and above there at 66.35 with
support at 65.2 and 64.75. The market’s short-term trend is negative as the
close remains below the 9-day moving average.

 

SUGAR MARKET RECAP

8/13/2004

October Sugar closed down 0.11 at 7.87. This was
0.03 up from the low and 0.15 off the high.

The sugar market continued to consolidate but
many traders continue to think that the fund and small spec position is ready to
bail out. In fact, the Press was reporting that the funds were indeed stepping
aside but with energy prices soaring we have to think that the alcohol/ethanol
influence will provide some cushion against the slumping bull case. The trade
was also expecting the COT report to foster talk of spec liquidation especially
in the wake of all the trade records posted in New York sugar. Reports of scale
down professional and trade buying seemed to underpin the market Friday against
the light liquidation tilt.

Technical Outlook

#SUGAR (OCT) 08/16/04: The daily closing price
reversal down puts the market on the defensive. The market’s close below the 1st
swing support number suggests a moderately negative setup for today. Swing
resistance comes in at 8.08, with support found at 7.72. The market’s short-term
trend is negative as the close remains below the 9-day moving average. Daily
stochastics are trending lower, but have declined into oversold territory. The
next downside objective is now at 7.72. Daily studies pointing down suggests
selling minor rallies.

 

COTTON MARKET RECAP

8/13/2004

October Cotton finished up 0.53 at 43.55, 0.15
off the high and 0.65 up from the low.

If nothing else the cotton market is at least
beginning to show signs that the downdraft is getting overdone technically as
prices partially extended the prior day’s recovery motion. Rains last night in
Texas keep that crop in great shape, while the hurricane this weekend might dump
some badly needed rain in southern part of Georgia and the Carolina’s. While
some traders have suggested that the cotton crops biggest threat (not having
enough sunlight) is a long shot that is about the only issue with any
credibility. In a positive note, US June textile and Apparel imports rose 20.6%
but that demand news is muted by massive supply and overall macro economic
concerns.

Technical Outlook

#COTTON (OCT) 08/16/04: The market’s close below
the 9-day moving average is an indication the short-term trend remains negative.
A positive setup occurred with the close over the 1st swing resistance. Next
resistance area comes in at 43.95 and then again at 44.23, while support is
targeted at 43.15 and 42.63. Positive momentum studies in the neutral zone will
tend to reinforce higher price action. The next upside target is 44.23.