Here’s How The Bears Could Gain An Edge On Friday

The early rally lacked fundamental news to
support and rationalize the recent strength and the lower close keeps the market
in a slight downtrend. The 3-day bounce off of the contract low helped correct
the oversold condition and the lack of new fundamental news triggered some
short-covering early in the session but weakness in soybeans helped drag the
market lower into the close. The lack of follow-through buying surprised some
traders after a few days of short-covering this week provided solid buying
support with speculators holding a record net short position in the last
Commitment-of-Traders report. India sold 12,000 tons of corn to Sri Lanka
overnight. Deliveries of 646 contracts against the December contract failed to
attract much selling interest. Strength in wheat and short-covering from
speculators appear to be the only supportive factors early in the day but the
lower soybean market and talk of an increase in cash movement in the weeks ahead
helped pressure futures into the close. Technical support for March Corn comes
in at 204 1/4 and 203 1/2 with resistance at 206 3/4 and 207 3/4.

Technical Outlook

CORN (MAR) 12/16/2004: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. A positive signal for trend short-term was
given on a close over the 9-bar moving average. The downside closing price
reversal on the daily chart is somewhat negative. It is a slightly negative
indicator that the close was lower than the pivot swing number. The next upside
objective is 208 3/4. The next area of resistance is around 206 1/2 and 208 3/4,
while 1st support hits today at 203 1/2 and below there at 202 1/2.

 

SOY COMPLEX RECAP

12/15/2004

January Soybeans finished down 4 1/4 at 546, 6
off the high and 1 up from the low. March Soybeans closed down 4 3/4 at 545 1/4.
This was 1 3/4 up from the low and 6 1/4 off the high.

March Soymeal closed down 2.3 at 162.8. This was
0.5 up from the low and 1.9 off the high.

March Soybean Oil finished down 0.1 at 20.36,
0.17 off the high and 0.14 up from the low.

Talk of increasing cash selling from producers
and a lack of new speculative short-covering helped to pressure the market as
the early move to the highest level since November 26th failed to attract new
buyers. Taiwan bought 27,000 tons of US soybeans overnight and Asia rust was
reported in the 6th state in Brazil this season and a second case reported in
Argentina overnight which helped to provide underlying support. However, news
from Taiwan that two stains of bird flu were reported in migratory birds for the
first time since early 2004 was seen as a bearish development for meal. Heavy
deliveries against the expired December oil and meal contracts this morning
added to the bearish tone. Weakness in the palm oil futures overnight was also
seen as a bearish factor for oil but a lack of producer selling for soybeans in
Brazil and in the US continues to provide some underlying support. Support for
March soybeans comes in at 538 and 534 1/2 with resistance at 550 and 557.

Technical Outlook

BEANS (JAN) 12/16/2004: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. A positive signal for trend short-term was
given on a close over the 9-bar moving average. The market could take on a
defensive posture with the daily closing price reversal down. The market’s close
below the pivot swing number is a mildly negative setup. The near-term upside
target is at 554 1/4. The next area of resistance is around 549 1/2 and 554 1/4,
while 1st support hits today at 542 1/2 and below there at 540 1/4.

MEAL (JAN) 12/16/2004: The moving average
crossover up (9 above 18) indicates a possible developing short-term uptrend.
Stochastics are at mid-range but trending higher, which should reinforce a move
higher if resistance levels are taken out. The market’s short-term trend is
positive on the close above the 9-day moving average. The market’s close below
the 1st swing support number suggests a moderately negative setup for today. The
near-term upside target is at 164.0. The next area of resistance is around 162.4
and 164.0, while 1st support hits today at 160.2 and below there at 159.5.

BEANOIL (JAN) 12/16/2004: The stochastic
indicator is rising from oversold levels, which is bullish and should support
higher prices. The market’s short-term trend is positive on the close above the
9-day moving average. The market could take on a defensive posture with the
daily closing price reversal down. It is a slightly negative indicator that the
close was lower than the pivot swing number. The next upside target is 20.60.
The next area of resistance is around 20.42 and 20.60, while 1st support hits
today at 20.10 and below there at 19.95.

 

WHEAT MARKET RECAP

12/15/2004

March Wheat finished up 1 1/2 at 302 1/2, 1 1/2 off the high
and 3 up from the low. May Wheat closed up 1 1/2 at 309 1/2. This was 3 up from
the low and 1 1/2 off the high.

The lower opening attracted some light commercial
buying interest which supported a bounce to match the highest level seen since
December 6th and the highest close since December 6th. With funds holding a
record net short position, a decision to exit just a part of this position into
the end of the year could provide underlying support if resistance levels are
violated. Deliveries on the expired December contract (85 lots) helped pressure
the market early. Jordan bought 100,000 tons of optional origin hard wheat.
Traders were uncertain if the US received any of this business and Iraq is
tendering for 100,000-150,000 tons of optional origin wheat today as well.
Argentina officials raised their wheat production forecast to 15.1 million tons
from 14-15 million tons as there previous forecast with some trade estimates as
high as 15.5 million. The Farm Ministry in France projected soft wheat seedings
for the 2005 harvest at 4.88 million hectares which is up 1.3% from last year.
Support for March wheat comes in at 300 and 297 with 307 and 308 3/4 as next
resistance.

Technical Outlook

WHEAT (MAR) 12/16/2004: Rising from oversold
levels, daily momentum studies would support higher prices, especially on a
close above resistance. The market’s close above the 9-day moving average
suggests the short-term trend remains positive. It is a mildly bullish indicator
that the market closed over the pivot swing number. The next upside objective is
306 1/2. The next area of resistance is around 304 3/4 and 306 1/2, while 1st
support hits today at 300 1/4 and below there at 297 3/4.

 

LIVE CATTLE RECAP

12/15/2004

February Live Cattle closed up 1.55 at 88.07.
This was 1.67 up from the low and 0.27 off the high.

January Feeder Cattle finished up 1.77 at 102.07,
0.67 off the high and 2.07 up from the low.

February cattle closed sharply higher on the
session as an early break failed to attract new long liquidation selling and
some local technical buying emerged to drive the market higher and through
stops. Funds turned active buyers in spite of expectations for lower cash trade
this week. Boxed-beef cut-out values at mid-session were up $.04 to $140.62 as
compared with 146.24 last week at this time. Slaughter came in at 122,000 head
as compared with trade expectations at 118,000-128,000. The average trade
estimate for December 1st on-feed supply for Friday’s came in at 100.6% (range
99.6-102). November placements are pegged at 95.2% of last year (range 90.2-102)
and markets are expected at 109.2% (range 104-113.5).

Technical Outlook

CATTLE (FEB) 12/16/2004: The major trend could be
turning up with the close back above the 40-day moving average. Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. A positive signal for trend short-term was given on a close over the
9-bar moving average. 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 next downside objective is 85.770. The next area of
resistance is around 89.020 and 89.650, while 1st support hits today at 87.100
and below there at 85.770.

 

LEAN HOGS RECAP

12/15/2004

February Lean Hogs closed up 1.20 at 72.45. This
was 1.80 up from the low and 0.05 off the high.

February Pork Bellies finished up 1.07 at 98.57,
0.32 off the high and 1.27 up from the low.

February hogs closed sharply higher on the
session after the move below yesterday’s lows was met with good support from the
trade. Cash markets were lower but packer profit margins have improved this past
week and strength in the loin market suggests that exports remain on a bullish
pace. Strength in the cattle market, a discount of February hogs to the cash
market and ideas that pork production may hit a seasonal peak this year and
begin to subside into the first quarter helped support. The CME 2-day lean index
for the period ending December 13th was reported at 76.06, down $1.39 on the
session and down from 80.74 one week previous. Slaughter came in at 405,000 head
(maybe an all-time high) as compared with trade expectations at 400,000-402,000.
The higher than expected slaughter for the third day in a row is a positive
force for packer demand and the profitable margins by the packer could support a
hefty Saturday slaughter which means that packers may be willing to bid up cash
markets late this week.

Technical Outlook

HOGS (FEB) 12/16/2004: The major trend could be
turning up with the close back above the 40-day moving average. 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 outside day up and close above the previous day’s high
is a positive signal. The market’s close above the 2nd swing resistance number
is a bullish indication. The next downside objective is 70.170. The next area of
resistance is around 73.370 and 73.850, while 1st support hits today at 71.550
and below there at 70.170.

 

COCOA MARKET RECAP

12/15/2004

March Cocoa finished up 69 at 1667, 2 off the
high and 42 up from the low.

The cocoa market vaulted higher and might have
managed the run on news that arrivals continue to fall behind year ago levels.
According to Dow Jones the main ivory Coast ports are showing arrivals to be
down 16.2% versus last year and so far the trade isn’t sure if that is because
of quality control and other mechanical issues, smuggling or because the crop is
smaller. In the event that the market thinks that the crop is smaller that would
probably send prices up to new highs for the year. Once again the Dollar was
weak enough to give US cocoa prices an added lift and that is becoming a trend.

Technical Outlook

COCOA (MAR) 12/16/2004: The daily stochastics
gave a bullish indicator with a crossover up. Stochastics are at mid-range but
trending higher, which should reinforce a move higher if resistance levels are
taken out. 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 near-term upside target is at 1701. The next area of resistance
is around 1689 and 1701, while 1st support hits today at 1645 and below there at
1613.

 

COFFEE MARKET RECAP

12/15/2004

March Coffee closed up 6.50 at 100.55. This was
6.05 up from the low and 0.95 off the high.

After a slightly higher opening, there was a lack
of new selling interest and fund buying emerged to trigger a 650 point higher
close. March coffee managed to rise to 101.50 into the mid-session but light
selling emerged to slow the gains and the market closed 95 points off of the
highs. The ICO forecast for a 7 million bag world production deficit for the
2005/2006 season on the heals of last weeks bullish Brazil production forecast
seemed to be enough to see active buying from speculators and helped provide
trade house support on the break this week. After the close, the US Green Coffee
Association indicated that warehouse stocks in November fell by 234,367 bags to
5.17 million bags. The drawdown was higher than traders expected and the news
may be seen as supportive.

Technical Outlook

COFFEE (MAR) 12/16/2004: Negative momentum
studies in the neutral zone will tend to reinforce lower price action. The close
above the 9-day moving average is a positive short-term indicator for trend.
There could be more upside follow through since the market closed above the 2nd
swing resistance. The next downside target is now at 92.30. The next area of
resistance is around 104.05 and 106.25, while 1st support hits today at 97.10
and below there at 92.30.

 

SUGAR MARKET RECAP

12/15/2004

March Sugar closed down 0.04 at 8.55. This was
0.10 up from the low and 0.05 off the high.

The lowest close since November 12th leaves the
market vulnerable to more long liquidation selling with speculators holding a
hefty net short position. However, the March sugar closed 10 points off of the
lows of the day and down just 4 points on the session. Trade house buying was
noted after the speculative long liquidation selling slowed. Trade houses could
be buying after a recent up tick in cash business. Iraq bought 100,000 tons of
white sugar for delivery by the end of February.

Technical Outlook

SUGAR (MAR) 12/16/2004: Momentum studies are
declining, but have fallen to oversold levels. 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
8.39. The next area of resistance is around 8.62 and 8.68, while 1st support
hits today at 8.48 and below there at 8.39.

 

COTTON MARKET RECAP

12/15/2004

March Cotton finished up 0.13 at 42.76, 0.74 off
the high and 0.11 up from the low.

March cotton closed 13 higher on the session but
near the lows of the day and near 75 off of the highs of the day. Futures remain
in a choppy trading range over the past month as lower prices seem to be met
with temporary bullish export news but rallies seem to be met with significant
trade house selling. The huge supply is clashing with strong demand from China o
create the choppy trade. Eventually, the supply should saturate demand and
support a resumption of the downtrend. After last weeks marketing year high in
export sales at 378,100 bales, traders are looking for this weeks sales,
released before the opening, to come in near 300,000-375,000 bales. Shipments
are expected near 150,000-200,000 bales as compared with 187,600 bales last
week.

Technical Outlook

COTTON (MAR) 12/16/2004: Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. The market’s short-term trend is positive on the close above the 9-day
moving average. The market tilt is slightly negative with the close under the
pivot. The next downside target is now at 42.07. The next area of resistance is
around 43.18 and 43.76, while 1st support hits today at 42.34 and below there at
42.07.