Here’s What Undermined Energy Prices

The low today was the same as the low for
Thursday and Wednesday and the late rally leaves the lows as technical support.
Traders remain nervous over a weak export outlook over the short-term as the
jump in the dollar and contamination concerns persist. For the weekly export
inspections report, released during the session, exports for the week hit 29.7
million bushels as compared with trade expectations at 27-30 million bushels.
Cumulative exports have reached 48.4% of the USDA forecast for the season as
compared with 55% on average for this time of the year. The South Korea Food and
Drug Administration indicated on Friday that they were investigating imports of
US corn to determine if imports are contaminated by unapproved GMO material.
South Korea has decided to require a certificate for future imports of food
grade corn from the US that the cargo does not contain Bt10. For the USDA
planted acreage report on Thursday, a Reuter’s survey showed that traders are
looking for corn planted acreage near 82.4 million acres (range 81.7-83.4) as
compared with 80.93 million last year. For the grain stocks report, March 1st
stocks are expected to come in near 6.72 billion bushels (range 6.69-6.75) as
compared with 5.27 billion bushels last year. Resistance for May corn comes in
at 213 and 216 1/2 with support at 209 1/4 triple bottom.

Technical Outlook

CORN (MAY) 03/29/2005: The market now above the
60-day moving average suggests the longer-term trend has turned up. The moving
average crossover down (9 below 18) indicates a possible developing short-term
downtrend. Daily stochastics are trending lower but have declined into oversold
territory. The major trend has turned down with the cross over back below the
18-day moving average. The market has a bullish tilt coming into today’s trade
with the close above the 2nd swing resistance. The next downside target is 208.
The next area of resistance is around 214 3/4 and 216, while 1st support hits
today at 210 3/4 and below there at 208.

 

SOY COMPLEX RECAP

3/28/2005

May Soybeans finished down 3 at 625 3/4, 6 1/4
off the high and 5 1/4 up from the low. November Soybeans closed down 3 at 601.
This was 4 1/2 up from the low and 2 off the high.

May Soymeal closed down 2.3 at 186.1. This was
0.5 up from the low and 2.9 off the high.

May Soybean Oil finished down 0.16 at 22.79, 0.41
off the high and 0.02 up from the low.

Trade was slow with low volume and light long
liquidation selling from speculators. Strength in the dollar (5-month high
against the Yen) helped slow the buying support on the early bounce but the
market seemed to lack the speculative selling to add much pressure. Weather
seems to be a slightly negative factor as dryness for much of Brazil should
support active harvest progress. For the weekly export inspections report,
released this morning, exports for the week hit 16.8 million bushels as compared
with trade expectations at 17-19 million bushels. Cumulative exports have
reached 870.9 million bushels as compared with 761.1 million last year. Gulf
basis levels were firm this morning with tight producer holding helping to
provide some support. Speculative long liquidation selling pressuring the market
into the mid-session in light volume. For the planted acreage report on
Thursday, a Reuter’s survey showed that traders are looking for soybean planted
acreage near 73.37 million acres (range 72.1-74.5) as compared with 75.2 million
last year. For the grain stocks report, March 1st stocks are expected to come in
near 1.425 billion bushels (range 1.405-1.454) as compared with 906 million
bushels last year. Short-term support for May soybeans comes in at 617 1/4 with
631 1/2 and 643 1/2 as resistance.

Technical Outlook

BEANS (MAY) 03/29/2005: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The major trend has turned down with the cross over back
below the 18-day moving average. The market tilt is slightly negative with the
close under the pivot. The next downside objective is now at 614 1/2. The next
area of resistance is around 631 1/2 and 637 1/2, while 1st support hits today
at 620 and below there at 614 1/2.

MEAL (MAY) 03/29/2005: Momentum studies are
declining, but have fallen to oversold levels. The close below the 18-day moving
average is an indication the longer-term trend has turned down. The market’s
close below the 1st swing support number suggests a moderately negative setup
for today. The next downside target is 183.3. The next area of resistance is
around 187.8 and 190.1, while 1st support hits today at 184.4 and below there at
183.3.

BEANOIL (MAY) 03/29/2005: The downside crossover
of the 9 & 18 bar moving average is a negative signal. Momentum studies are
declining, but have fallen to oversold levels. The major trend has turned down
with the cross over back below the 18-day moving average. The daily closing
price reversal down is a negative indicator for prices. It is a slightly
negative indicator that the close was under the swing pivot. The next downside
target is now at 22.46. The next area of resistance is around 23.00 and 23.31,
while 1st support hits today at 22.58 and below there at 22.46.

 

WHEAT MARKET RECAP

3/28/2005

May Wheat finished down 2 1/2 at 336, 3 off the high and 4 up
from the low. July Wheat closed down 1 1/2 at 345 1/2. This was 4 up from the
low and 1 1/2 off the high.

The jump in the US dollar, continued speculative
long liquidation selling and ideas that weather conditions remain favorable for
good crops in the plains helped to trigger more selling and lower trade early on
Monday. For the weekly export inspections report, released during the session,
exports for the week hit 20.53 million bushels as compared with trade
expectations at 18-20 million bushels. Cumulative exports have reached 86.3% of
the USDA forecast for the season as compared with 81.9% on average for this time
of the year. For the planted acreage report on Thursday, a Reuter’s survey
showed that traders are looking for spring wheat planted acreage near 13.7
million acres (range 13.4-14.4) as compared with 13.76 million last year. Winter
wheat planted acreage is expected to be down 1.75 million acres from last year.
For the grain stocks report, March 1st stocks are expected to come in near 993
million bushels (range 973-1.04) as compared with 1.021 billion bushels last
year. May wheat support comes in at 332 1/2 and 323 1/2 with resistance at 337
and 341 1/4.

Technical Outlook

WHEAT (MAY) 03/29/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
major trend has turned down with the cross over back below the 18-day moving
average. The market’s close below the 1st swing support number suggests a
moderately negative setup for today. The next downside target is 328 3/4. The
next area of resistance is around 339 1/2 and 342 3/4, while 1st support hits
today at 332 1/2 and below there at 328 3/4.

 

LIVE CATTLE RECAP

3/28/2005

April Live Cattle finished up 1.45 at 89.80, 0.10
off the high and 0.95 up from the low.

May Feeder Cattle closed up 1.65 at 104.92. This
was 0.92 up from the low and 0.22 off the high.

June cattle closed sharply higher on the session
with improving export hopes and a lack of Canadian cattle supply helping to
support the active speculative buying. December cattle managed to move to a new
contract high and August cattle to the highest level since August 18th.
Boxed-beef cut-out values at mid-session were up $.13 to $149.14 as compared
with $155.18 last week. Slaughter came in at 98,000 head as compared with trade
expectations at 105,000-115,000 head.

Technical Outlook

CATTLE (APR) 03/29/2005: Momentum studies
trending lower at mid-range should accelerate a move lower if support levels are
taken out. The major trend could be turning up with the close back above the
18-day moving average. If yesterday’s gap higher on the day session chart holds,
additional buying could develop this session. The market has a bullish tilt
coming into today’s trade with the close above the 2nd swing resistance. The
next downside objective is 88.550. The next area of resistance is around 90.320
and 90.620, while 1st support hits today at 89.300 and below there at 88.550.

 

LEAN HOGS RECAP

3/28/2005

April Lean Hogs finished down 0.65 at 69.65, 0.55
off the high and 0.35 up from the low.

May Pork Bellies closed up 0.65 at 95.15. This
was 0.90 up from the low and 0.75 off the high.

June hogs closed slightly higher on the session
as strength in the cattle market and a lack of fund long liquidation selling
helped support the late bounce. The early test of last weeks lows held support
in spite of cash hogs trading $1.00 lower and some light fears that a few hogs
may be backed-up in the country. Talk of progress in re-opening beef trade in
Asia has traders nervous over pork export demand which was held up higher than
expectations for much of the past year due to a ban on US beef to Japan and
others. Slaughter came in at 280,000 head as compared with trade expectations at
278,000-290,000 head. The 2-day lean index for the period ending March 24th came
in at 68.15, down.24 on the session and down from 68.95 one week previous.

Technical Outlook

HOGS (APR) 03/29/2005: Momentum studies are still
bearish but are now at oversold levels and will tend to support reversal action
if it occurs. The major trend has turned down with the cross over back below the
18-day moving average. The market setup is somewhat negative with the close
under the 1st swing support. The next downside objective is 68.820. With a
reading under 30, the 9-day RSI is approaching oversold levels. The next area of
resistance is around 70.100 and 70.600, while 1st support hits today at 69.220
and below there at 68.820.

 

COCOA MARKET RECAP

3/28/2005

May Cocoa finished down 14 at 1570, 10 off the
high and 9 up from the low.

The cocoa market managed an inside day down and
would seem to be vulnerable to more near term selling. In fact, the rising
Dollar looks to be pressuring prices and we also have to think that the overly
long small spec long position remains on the ropes. We even might be seeing a
slight pattern of increases in the daily stocks levels. In the end, the lack of
ongoing politically motivated violence at the Ivory Coast makes the spec long
camp less inclined to hold against price diversity.

Technical Outlook

COCOA (MAY) 03/29/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
market back below the 18-day moving average suggests the longer-term trend could
be turning down. The swing indicator gave a moderately negative reading with the
close below the 1st support number. The next downside objective is 1552. With a
reading under 30, the 9-day RSI is approaching oversold levels. The next area of
resistance is around 1579 and 1589, while 1st support hits today at 1561 and
below there at 1552.

 

COFFEE MARKET RECAP

3/28/2005

May Coffee closed up 1.45 at 122.35. This was
2.80 up from the low and 0.15 off the high.

Another new low for the move was rejected
suggesting that the market might have reached a near term oversold situation.
Apparently the earthquake providing the market with an excuse to rally but in
retrospect it would not seem like the infrastructure or the transportation of
coffee was influenced much by the quake. The mere presence of such a large
unknown, (the quake) certainly spurred some shorts to jump aside especially
after the rather aggressive selling of the last three weeks. In short it would
not appear like the shift in sentiment Monday has the capacity to sustain over
the coming sessions.

Technical Outlook

COFFEE (MAY) 03/29/2005: The cross over and close
above the 40-day moving average is an indication the longer-term trend has
turned positive. Daily stochastics are trending lower but have declined into
oversold territory. The market back below the 18-day moving average suggests the
longer-term trend could be turning down. The daily closing price reversal up is
a positive indicator that could support higher prices. It is a mildly bullish
indicator that the market closed over the pivot swing number. The next downside
target is 118.75. The next area of resistance is around 123.80 and 124.60, while
1st support hits today at 120.90 and below there at 118.75.

 

SUGAR MARKET RECAP

3/28/2005

May Sugar closed down 0.06 at 8.61. This was 0.01
up from the low and 0.12 off the high.

May sugar closed 6 lower on the session and had
the lowest close since November 4th due to a steady flow of long liquidation
selling from the speculator and a lack of aggressive buying in the cash market.
While cash traders feel the recent break has attracted increased interest in the
cash market, buyers are not active enough to shift the trend of long liquidation
selling from the speculators. Large and small speculators combined reduced their
net long position by more than 21,500 contracts in just one week (ending March
22nd) but speculators were still holding a net long position of nearly 112,000
contracts basis the COT with options report. The hefty net long position and
weak technical action could keep the selling trend in tact.

Technical Outlook

SUGAR (MAY) 03/29/2005: 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’s close below the pivot swing number is a mildly negative setup. The next
downside objective is 8.51. The 9-day RSI under 30 indicates the market is
approaching oversold levels. The next area of resistance is around 8.67 and
8.76, while 1st support hits today at 8.55 and below there at 8.51.

 

COTTON MARKET RECAP

3/28/2005

May Cotton finished up 2.37 at 53.96, 0.59 off
the high and 1.86 up from the low.

May cotton drove sharply higher on the session
for the second day in a row and managed to push to the highest level since
September 14th. Speculators were active buyers and many small specs have been
trying to pick a top in cotton and stop-loss orders were hit on the rally. Ideas
that China import activity will accelerate after active textile exports in the
past several months helped to provide support. China was the largest buyer in
the sales report and the export shipment report last week. In February, China
apparel exports to the US hit $650 million, up 147% from last year as the end of
import quotas and other restrictions of China trade were lifted at the start of
the year. While this factor has traders nervous over continued decline in
domestic usage, ideas that exports will pick up helped to support.

Technical Outlook

COTTON (MAY) 03/29/2005: The daily stochastics
have crossed over up which is a bullish indication. Momentum studies are rising
from mid-range, which could accelerate a move higher if resistance levels are
penetrated. The market now above the 18-day moving average suggests the
longer-term trend has turned up. There could be more upside follow through since
the market closed above the 2nd swing resistance. The near-term upside target is
at 56.09. The next area of resistance is around 55.18 and 56.09, while 1st
support hits today at 52.74 and below there at 51.20.