Have You Been Watching The Grains Lately?

The late rally in wheat and soybeans helped
support the 2 1/2 cent bounce off of the lows. A lack of support from fund
traders who have been active buyers in the last few weeks and some light
speculative long liquidation selling helped to pressure the market. Israel
bought 56,000 tons of US or South American corn overnight and Asian traders
reported overnight that Malaysia has bought near 100,000 tons of corn from China
in the past few weeks. For the weekly export sales report, corn sales came in at
1.01 million tons as compared with trade expectations at 600,000-800,000 tons.
Cumulative sales have reached 66.5% of the USDA forecast for the season as
compared with 66.3% on average for this time of the year. Basis levels are
steady to weak. Support for May corn comes in at 221 1/4 and 219 with resistance
at 225 1/4 and 228.

Technical Outlook

CORN (MAY) 03/18/2005: A bearish signal was
triggered on a crossover down in the daily stochastics. 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. More selling pressure is
likely given yesterday’s gap lower price action on the day session chart. The
market’s close below the pivot swing number is a mildly negative setup. The next
downside target is now at 220 1/4. The next area of resistance is around 225 and
226 1/4, while 1st support hits today at 222 and below there at 220 1/4.

 

SOY COMPLEX RECAP

3/17/2005

May Soybeans finished down 2 at 671 1/2, 3 1/2
off the high and 23 1/2 up from the low. November Soybeans closed up 1 at 636
1/2. This was 20 1/2 up from the low and 2 off the high.

May Soymeal closed down 1.1 at 196.8. This was
4.8 up from the low and 2.2 off the high.

May Soybean Oil finished up 0.19 at 24.34, 0.03
off the high and 1.02 up from the low.

While closing lower on the day, the 23 1/2 cent
surge late in the day appears to be a supportive technical development.
Follow-through technical selling after the reversal action yesterday helped
trigger the early weakness and a lack of fund buying support added to the
negative tone. Strong weekly export sales, released before the opening, failed
to provide much support. Dry weather in the forecast for southern Brazil for
next week was seen as a positive development as more damage could be seen,
especially in areas which did not get much rain on the weekend. Cash basis
levels are lower again and the weak technical action from yesterday has
attracted long liquidation selling from the speculator. For the weekly export
sales report, soybean sales came in at 656,600 tons as compared with trade
expectations at 300,000-500,000 tons. Cumulative sales have reached 92.9% of the
USDA forecast for the season as compared with 88.4% on average for this time of
the year. China was the primary buyer of 238,000 tons of the total. Meal sales
were 90,400 tons as compared with trade expectations at 50,000-125,000 tons.
Cumulative sales have reached 75.7% of the USDA forecast for the season as
compared with 71.9% on average for this time of the year. Oil sales were a
negative 3000 tons vs. expectations at 5,000-10,000 tons. Support for May
soybeans comes in at 664 1/2 with 681, 691 1/2 and 708 as next resistance.

Technical Outlook

BEANS (MAY) 03/18/2005: 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 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
downside objective is 639 1/2. The 9-day RSI over 70 indicates the market is
approaching overbought levels. The next area of resistance is around 685 and 693
1/2, while 1st support hits today at 658 and below there at 639 1/2.

MEAL (MAY) 03/18/2005: 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. The market tilt is slightly negative with the
close under the pivot. The next downside objective is 189.2. The next area of
resistance is around 200.3 and 203.1, while 1st support hits today at 193.3 and
below there at 189.2.

BEANOIL (MAY) 03/18/2005: 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 is an indication the longer-term trend has
turned positive. The daily closing price reversal up is a positive indicator
that could support higher prices. The close over the pivot swing is a somewhat
positive setup. The next downside objective is now at 23.05. The market is
becoming somewhat overbought now that the RSI is over 70. The next area of
resistance is around 24.86 and 25.14, while 1st support hits today at 23.82 and
below there at 23.05.

 

WHEAT MARKET RECAP

3/17/2005

May Wheat finished up 5 1/2 at 366 1/2, 1 1/2 off the high and
11 up from the low. July Wheat closed up 6 at 374. This was 11 1/2 up from the
low and 1 off the high.

A turn up in soybeans from the sharply lower
trade at mid-session and renewed speculative buying supported the strong close
after a wide range day. The market was called moderately lower on the opening
but better than expected export news helped to provide underlying support. Japan
bought 100,000 tons of wheat at their weekly tender with 80,000 of the total
coming from the US. In addition, the weekly export sales report showed wheat
sales at 551,000 tons as compared with trade expectations at 300,000-450,000
tons. Cumulative sales have reached 88% of the USDA forecast for the season as
compared with 82.4% on average for this time of the year. Reports of active
producer selling and a weaker basis tone kept a lid on the early buying support.
The weather looks mostly favorable for the winter wheat crop except for a few
dry pockets developing in western Kansas and Nebraska. Dryness is also a light
concern in parts of Europe for the developing crop. May wheat support moves up
to 360 with 369 and 374 as next resistance.

Technical Outlook

WHEAT (MAY) 03/18/2005: Rising stochastics at
overbought levels warrant some caution for bulls. 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. Market positioning is positive with the close over the 1st swing
resistance. The next upside target is 376 1/2. The market is becoming somewhat
overbought now that the RSI is over 70. The next area of resistance is around
372 3/4 and 376 1/2, while 1st support hits today at 360 1/4 and below there at
351 3/4.

 

LIVE CATTLE RECAP

3/17/2005

April Live Cattle finished down 1.20 at 88.47,
1.32 off the high and 0.42 up from the low.

March Feeder Cattle closed down 0.15 at 105.90.
This was 0.35 up from the low and 0.30 off the high.

The cattle market pushed sharply lower with
uncertainty on demand and supply over the near-term helping to pressure the
market and continued rolling of longs out of the April contract added to the
selling pressures. With uncertainty of supply, retailers and wholesalers may let
the pipeline empty which is a short-term negative force but a longer-term
bullish force. Boxed-beef cut-out values at mid-session were down $1.45 to
$156.92 as compared with $153.96 last week. Slaughter came in at 121,000 head
from trade expectations for 116,000-120,000 head.

Technical Outlook

CATTLE (APR) 03/18/2005: Momentum studies
trending lower at mid-range should accelerate a move lower if support levels are
taken out. The market now above the 18-day moving average suggests the
longer-term trend has turned up. The close below the 1st swing support could
weigh on the market. The next downside objective is now at 86.970. The next area
of resistance is around 89.350 and 90.450, while 1st support hits today at
87.620 and below there at 86.970.

 

LEAN HOGS RECAP

3/17/2005

April Lean Hogs finished down 0.70 at 70.57, 0.87
off the high and 0.42 up from the low.

March Pork Bellies closed down 0.55 at 89.05.
This was 0.65 up from the low and 0.45 off the high.

April hogs remained under pressure from the
rolling of longs to June which helped support the June contract. Weakness in
cattle and the continued weakness in pork product prices this week in spite of
the slower slaughter pace limited the gains in June and helped pressure April.
While the slaughter pace has come down, average weights have jumped which
suggests increased pork production when producers move the hogs. The 2-day lean
index for the period ending March 15th came in at 71.35, down 1.70 on the
session and down from 74.01 last week at this time. Slaughter came in at 366,000
head from trade expectations for 376,000-385,000 head.

Technical Outlook

HOGS (APR) 03/18/2005: Daily stochastics are
trending lower but have declined into oversold territory. The close under the
18-day moving average indicates the longer-term trend could be turning down. The
market setup is somewhat negative with the close under the 1st swing support.
The next downside target is now at 69.400. The next area of resistance is around
71.200 and 71.970, while 1st support hits today at 69.950 and below there at
69.400.

 

COCOA MARKET RECAP

3/17/2005

May Cocoa finished up 1 at 1830, 20 off the high
and 15 up from the low.

While cocoa prices haven’t necessarily exploded
over the last couple days on the potential for Ivory Coast violence it is
possible that some longs decided to take profits after the new high on Thursday
due to the potential for Peace meeting between opposing parties. We would have
expected news of lower Ivory Coast cocoa exports to have supported prices but so
far the market is unsure how to price the potential for slightly lower physical
supply. We continue to note that the cocoa market is significantly overbought
from a short term technical perspective.

Technical Outlook

COCOA (MAY) 03/18/2005: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The major trend could be turning up with the close back above the
18-day moving average. With the close higher than the pivot swing number, the
market is in a slightly bullish posture. The next upside target is 1866. The
market is becoming somewhat overbought now that the RSI is over 70. The next
area of resistance is around 1847 and 1866, while 1st support hits today at 1813
and below there at 1797.

 

COFFEE MARKET RECAP

3/17/2005

May Coffee closed down 0.25 at 136.10. This was
0.80 up from the low and 0.70 off the high.

May coffee closed slightly lower in choppy,
two-sided trade. The small range of only 150 points has been uncommon for the
market in the recent months. The market found light support on a shallow break
but a lack of new buying interest from funds helped to limit the upside. The
longer-term fundamentals remain bullish but Brazil exports have been active this
week and roaster buyers seem to be waiting for a more substantial break in order
to buy. London nearby futures opened at an 8 day low before moving higher.
Weakness in other commodity markets may have added to the bearish tone.

Technical Outlook

COFFEE (MAY) 03/18/2005: 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’s
close below the pivot swing number is a mildly negative setup. The next upside
objective is 137.55. The next area of resistance is around 136.80 and 137.55,
while 1st support hits today at 135.35 and below there at 134.60.

 

SUGAR MARKET RECAP

3/17/2005

May Sugar closed down 0.03 at 9.12. This was 0.02
up from the low and 0.10 off the high.

The outside day down and lowest close in 5
trading sessions is a bearish short-term technical development. The market
bounced early but found a lack of new buying support from funds with weakness
noted in many commodity markets. London closed slightly lower after an early
bounce as well. The European Union sold 60,000 tonnes of white sugar at their
weekly tender at a maximum rebate of 38.396 euros. Traders were looking for
60,000-100,000 tons. Traders await increased buying from Russia, India and maybe
China soon but there is also bearish talk that buyers will be very patient and
wait for corrections to buy. Drought conditions in Thailand remain a concern and
Cuba production is also expected to be low. The dry conditions in southern parts
of the growing region in Brazil has some traders beginning to trim production
forecasts for the expected record crop from the center-south region.

Technical Outlook

SUGAR (MAY) 03/18/2005: Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The market now
above the 18-day moving average suggests the longer-term trend has turned up.
The daily closing price reversal down puts the market on the defensive. The
market’s close below the pivot swing number is a mildly negative setup. The
near-term upside target is at 9.26. The next area of resistance is around 9.18
and 9.26, while 1st support hits today at 9.06 and below there at 9.02.

 

COTTON MARKET RECAP

3/17/2005

May Cotton finished down 2.45 at 51.33, 1.92 off
the high and 0.48 up from the low.

May cotton pushed lower early in the session and
then experienced increased stop-loss selling which drove the market sharply
lower on the day with May down 293 on the session at the lows. The late recovery
in the grains failed to pull cotton up much. The export news was not bullish
enough to entice new buyers and ideas that the market is overbought and that the
pipeline is more full after good producer selling of the past week helped to
pressure. Weekly export sales came in at 162,700 bales as compared with trade
expectations at 150,000-200,000 bales. Cumulative sales have reached 86% of the
USDA forecast for the season as compared with 92.6% on average for this time of
the year.

Technical Outlook

COTTON (MAY) 03/18/2005: The daily stochastics
have crossed over down which is a bearish indication. 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
defensive setup, with the close under the 2nd swing support, could cause some
early weakness. The next downside target is now at 49.29. The next area of
resistance is around 52.52 and 54.09, while 1st support hits today at 50.13 and
below there at 49.29.