Gold Plunges–Here’s Why

The market found some early support from the
strength in soybeans but a lack of fuel to support follow-through buying
triggered the weakness into the mid-session. Interior basis levels were weak and
the northwestern cornbelt is dry enough to see continued harvest progress,
especially in Minnesota and Iowa which are farthest behind. Iowa harvest is just
62% complete from 82% normal and Minnesota is now 45% harvested as compared with
95% last year and 84% for the 5-year average. Trade estimates for next weeks
USDA Crop Production report are beginning to hit the market. FC Stone pegged the
crop at 11.573 billion bushels as compared with last months USDA forecast at
11.613 billion. The weekly crop progress report showed the crop was 65%
harvested as compared with trade expectations at 63-65% harvested and compared
with 55% last week. South Korea bought 155,000 tons of optional origin corn.
Support for December corn comes in at 199 and 197 with resistance at 201 1/2 and
203 1/2.

Technical Outlook

CORN (DEC) 11/03/2004: Negative momentum studies
in the neutral zone will tend to reinforce lower price action. A negative signal
for trend short-term was given on a close under the 9-bar moving average. It is
a slightly negative indicator that the close was under the swing pivot. The next
downside target is 198. The next area of resistance is around 200 3/4 and 202
1/4, while 1st support hits today at 198 3/4 and below there at 198.

 

SOY COMPLEX RECAP

11/2/2004

January Soybeans finished up 4 at 525 1/2, 1/2
off the high and 3 1/2 up from the low. March Soybeans closed up 1 1/2 at 529.
This was 2 3/4 up from the low and 1 1/2 off the high.

December Soymeal closed up 1 at 151.1. This was
1.0 up from the low and 0.9 off the high.

December Soybean Oil finished down 0.19 at 20.99,
0.43 off the high and 0.09 up from the low.

Ideas that the market was oversold after Monday’s
break and a lack of new bearish news helped to trigger a bounce in soybeans.
Some new demand and a lack of deliveries along with a firm tone in the cash
market helped to support. November soybeans gained sharply on January as there
was only 1 contract delivered overnight and producer selling remains light.
However, traders feel that once enough soybeans are purchased to fill the
pipeline that prices for 2005 delivery will remain weak. The USDA confirmed that
US exporters sold 180,000 tons of soybeans to China. Rain slowed the harvest
across the central cornbelt and helped provide some psychological support. The
weekly crop progress report showed the crop was 84% complete as compared with
trade expectations of 82-86% and 89% as the 14-year average for this time of the
year. Trade estimates for next weeks USDA Crop Production report are beginning
to hit the market. FC Stone pegged the crop at 3.118 billion bushels as compared
with last months USDA forecast at 3.107 billion. January soybean resistance
comes in at 528 and 530 with support at 521 and 514.

Technical Outlook

BEANS (JAN) 11/03/2004: Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
A negative signal for trend short-term was given on a close under the 9-bar
moving average. It is a mildly bullish indicator that the market closed over the
pivot swing number. The next downside target is 520 3/4. The next area of
resistance is around 527 1/2 and 528 3/4, while 1st support hits today at 523
1/2 and below there at 520 3/4.

MEAL (DEC) 11/03/2004: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
close below the 9-day moving average is a negative short-term indicator for
trend. The market has a slightly positive tilt with the close over the swing
pivot. The next downside target is 149.2. The next area of resistance is around
152.0 and 152.9, while 1st support hits today at 150.2 and below there at 149.2.

BEANOIL (DEC) 11/03/2004: The daily stochastics
gave a bearish indicator with a crossover down. Momentum studies trending lower
at mid-range should accelerate a move lower if support levels are taken out. The
close below the 9-day moving average is a negative short-term indicator for
trend. The outside day down and close below the previous day’s low is a negative
signal. The market setup is somewhat negative with the close under the 1st swing
support. The next downside target is now at 20.56. The next area of resistance
is around 21.25 and 21.59, while 1st support hits today at 20.73 and below there
at 20.56.

 

WHEAT MARKET RECAP

11/2/2004

December Wheat finished down 4 at 302 1/4, 6 3/4 off the high
and 1/4 up from the low. March Wheat closed down 4 at 315. This was 1/2 up from
the low and 6 off the high.

Light speculative short-covering helped support
the early bounce but the market seemed to lack follow-through buying interest
and some light fund selling emerged to push futures lower on the day. Aggressive
fund selling has pounded the market lower in the last two trading sessions. The
trade psychology remains weak with talk of absorbing a record world crop and
also talk of improving crop conditions for the freshly planted winter wheat crop
helped to pressure. Crops rated in good to excellent condition came in at 78%
from 76% last week and 49% last year at this time. Producer selling was said to
be light with cash basis levels steady. The Ag Ministry in China indicated that
drought conditions in parts of the southern growing regions has delayed and in
some cases prevented the planting of the winter wheat crop. December wheat
support comes in at 303 and 300 with 308 and 311 1/2 as resistance.

Technical Outlook

WHEAT (DEC) 11/03/2004: Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
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 297. The next area of resistance is
around 305 3/4 and 310 3/4, while 1st support hits today at 298 3/4 and below
there at 297.

 

LIVE CATTLE RECAP

11/2/2004

December Live Cattle closed down 0.20 at 83.75.
This was 0.50 up from the low and 0.42 off the high.

November Feeder Cattle finished down 0.55 at
108.15, 0.65 off the high and 0.10 up from the low.

The cattle market pushed moderately lower on the
session for before finding some light buying support after the move to the
lowest level since Mid-May failed to attract new sellers. Boxed-beef prices were
down $1.87 to $135.94 at mid-session as compared with $143.01 last week at this
time. Traders believe that the steep drop in beef prices and the increase in the
showlist this week could cause cash market to fall $1.00-$2.00 this week after
trading at $85.00 late last week. Offers in the cash market were at
$87.00-$88.00 with packer bids at $81.00.

Technical Outlook

CATTLE (DEC) 11/03/2004: Momentum studies are
declining, but have fallen to oversold levels. The market’s close below the
9-day moving average is an indication the short-term trend remains negative. The
market tilt is slightly negative with the close under the pivot. The next
downside objective is 82.820. With a reading under 30, the 9-day RSI is
approaching oversold levels. The next area of resistance is around 84.200 and
84.650, while 1st support hits today at 83.300 and below there at 82.820.

 

LEAN HOGS RECAP

11/2/2004

December Lean Hogs closed up 0.67 at 69.85. This
was 1.00 up from the low and 0.25 off the high.

February Pork Bellies finished up 0.20 at 98.00,
1.20 off the high and 0.45 up from the low.

A burst in cash hogs prices due to strength in
pork values and stronger packer demand helped support solid early gains and new
contract highs for the February futures. The higher opening failed to attract
new buying support, especially for the February futures but the discount of
futures to cash helped support. Peoria live hog markets were up $2.00 which
supported the early strength. The weekly cold storage report, released this
afternoon, is expected to show an in-movement of 500,000-650,000 pounds of pork
bellies into cold storage. The CME 2-Day Lean Index for the period ending
October 29th was reported at 71.21, up 8 cents from the previous session and up
from 70.26 the previous week.

Technical Outlook

HOGS (DEC) 11/03/2004: 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. It is a mildly
bullish indicator that the market closed over the pivot swing number. The next
upside target is 70.900. The next area of resistance is around 70.470 and
70.900, while 1st support hits today at 69.250 and below there at 68.420.

 

COCOA MARKET RECAP

11/2/2004

December Cocoa finished unchanged at 1453, 14 off
the high and 2 up from the low.

The cocoa market attempted a fleeting bounce but
gave up the gains into the close when it became apparent that the blocking the
port flow wasn’t going to drive prices sharply higher. It would seem like some
producers were inclined to sell into the minor rally Tuesday and that really
would seem to undermine the effort to puff up prices by the blockade. Some
reports are suggesting that there are fewer pods on the trees and that might
begin to rekindle the fears that dryness in the summer months has in fact
reduced the size of the coming crop.

Technical Outlook

COCOA (DEC) 11/03/2004: Negative momentum studies
in the neutral zone will tend to reinforce lower price action. The market’s
close below the 9-day moving average is an indication the short-term trend
remains negative. It is a slightly negative indicator that the close was under
the swing pivot. The next downside target is now at 1440. The next area of
resistance is around 1461 and 1472, while 1st support hits today at 1445 and
below there at 1440.

 

COFFEE MARKET RECAP

11/2/2004

December Coffee closed up 1.50 at 75.70. This was
1.80 up from the low and 0.10 off the high.

March coffee closed 150 higher on the session and
at the highs of the day as roaster buying, especially in London as the recent
break to 2-year lows has attracted some increased interest. Vietnam has a
massive harvest just ahead but stocks are tight. The technical action remains
bearish as the market is in a long liquidation mode and speculators were net
long near 14,000 contracts in the last traders report. The drawdown in stocks at
the New York exchange has helped provide some underlying support. Guatemala
exports for the first month of the 2004/2005 marketing year for October was
93,588 bags, down 17.7% from last year. Costa Rica’s 2004/2005 crop is expected
to be just 1.955 million bags from 2.119 million last year.

Technical Outlook

COFFEE (DEC) 11/03/2004: The daily stochastics
gave a bullish indicator with a crossover up. Positive momentum studies in the
neutral zone will tend to reinforce higher price action. A negative signal for
trend short-term was given on a close under the 9-bar moving average. With the
close over the 1st swing resistance number, the market is in a moderately
positive position. The next upside objective is 77.15. The next area of
resistance is around 76.65 and 77.15, while 1st support hits today at 74.80 and
below there at 73.40.

 

SUGAR MARKET RECAP

11/2/2004

March Sugar closed up 0.04 at 8.50. This was 0.05
up from the low and 0.07 off the high.

The market closed slightly lower in choppy in
two-sided trade with an inside trading session. Light trade house and some
speculative buying helped support but futures could not find enough new interest
to break-out of Monday’s range. The lack of new buying from key importers has
left the market in a long liquidation mode for the past few weeks but the
speculative selling dried up for the session. Brazil traders are away for a
holiday which may have kept the trading in cash markets, slow. China production
for the coming year could be negatively impacted by drought conditions
developing in their key growing areas of the south.

Technical Outlook

SUGAR (MAR) 11/03/2004: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. 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 8.39. The next area of resistance
is around 8.55 and 8.62, while 1st support hits today at 8.44 and below there at
8.39.

 

COTTON MARKET RECAP

11/2/2004

December Cotton finished up 1.17 at 45.15, 0.15
off the high and 1.60 up from the low.

The cotton market opened lower but failed to find
new selling interest especially with snow moving into the Texas panhandle and
Lubbock Texas region. The Texas crop has been hit with cool and moist weather
recently which has slowed harvest progress and leaves some increased
possibilities of yield or quality damage. As of Sunday, the Texas crop was only
31% harvested as compared with 47% on average for this time of the year. On top
of potential weather problems in Texas, the market will begin to absorb trade
estimates for next weeks USDA Crop Production and Supply/demand report. The
International Cotton Advisory Committee pegged world cotton production at a
record 24.14 million tonnes, up 630,000 tons from last months estimate. World
demand is pegged at 21.97 million tons which leaves ending stocks at 9.84
million tonnes (45.2 million bales) from last years ending stocks of 7.67
million tonnes (35.24 million bales).

Technical Outlook

COTTON (DEC) 11/03/2004: Momentum studies are
declining, but have fallen to oversold levels. The market’s close below the
9-day moving average is an indication the short-term trend remains negative.
With the close over the 1st swing resistance number, the market is in a
moderately positive position. The next downside target is 43.04. The next area
of resistance is around 46.02 and 46.53, while 1st support hits today at 44.28
and below there at 43.04.