Here’s Why Bonds Got A Lift

The opening was more than 10 cents off of the
lows from Tuesday as fund short-covering was still noted on the opening but the
buying slowed and some light long liquidation selling emerged to knock the
market lower on the day. Some light rains have helped slow harvest over portions
of the cornbelt but the western areas are already clear and a cold weather front
for the weekend could bring on good harvest activity until more light rains
develop for early next week. South Korea bought 157,500 tons of optional origin
corn and will tender for 105,000 tons on Friday. The USDA raised yields for
Minnesota to 155 bushels/acre as compared with 147 in the September report and
146 bu/acre last year. Traders seem to question the high yield estimate. For the
week ending October 3rd, the weekly crop progress reports showed that only 36%
of the crop had reached maturity and this number jumped to 83% this week. In
addition, the USDA declared that 29 Minnesota counties are eligible for federal
disaster assistance due to crop damage caused by early frost. For the weekly
export sales report, released before the opening, traders are looking for corn
sales near 800,000-1.1 million tons vs. last weeks sales at 799,200 tons.
Support for December corn comes in at 203 1/4 and 202 with 207 1/4 and 210 1/2
as resistance.

Technical Outlook

CORN (DEC) 10/15/2004: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The market’s close below the 9-day moving average is an
indication the short-term trend remains negative. 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
target is 208 3/4. The next area of resistance is around 206 1/4 and 208 3/4,
while 1st support hits today at 202 1/4 and below there at 200 1/2.

 

SOY COMPLEX RECAP

10/14/2004

November Soybeans finished up 6 at 515 1/2, 1 off
the high and 6 up from the low. January Soybeans closed up 4 at 521 1/4. This
was 4 3/4 up from the low and 3/4 off the high.

December Soymeal closed down 0.4 at 152.5. This
was 0.4 up from the low and 1.0 off the high.

December Soybean Oil finished up 0.45 at 20.5,
0.07 off the high and 0.43 up from the low.

The market experienced some short-covering buying
support from ideas that the market is oversold and from supportive demand news.
The NOPA crush report for this morning was expected to show September crush near
105-111 million bushels as compared with 132.2 million bushels last year. The
crush was higher than expected at 113.9 million bushels. The sharp drop in
prices this week has slowed producer selling and cash basis levels were firming
up at various country locations. A sharp rally in December oil has helped
support the soybean market as oil has managed to fill the gap left from
Tuesday’s USDA report as the market is experiencing follow-through technical
buying from yesterday’s reversal. China imported 13.95 million tons of soybeans
in the first 9 months of this year, down 21.2% from last year. There were 167
deliveries for oil and 3 for meal this morning. For the weekly export sales
report, released before the opening, traders are looking for soybean sales near
600,000-900,000 tons, meal sales near 100,000-200,000 tons and 5,000-20,000 tons
for oil. November soybean resistance comes in at 516 and 519 with 506 and 500
1/2 as next support points.

Technical Outlook

BEANS (NOV) 10/15/2004: The crossover up in the
daily stochastics is a bullish signal. Rising from oversold levels, daily
momentum studies would support higher prices, especially on a close above
resistance. 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
near-term upside target is at 521 1/4. The next area of resistance is around 519
and 521 1/4, while 1st support hits today at 512 and below there at 507 1/4.

MEAL (DEC) 10/15/2004: Momentum studies are
declining, but have fallen to oversold levels. The close below the 9-day moving
average is a negative short-term indicator for trend. It is a slightly negative
indicator that the close was under the swing pivot. The next downside target is
151.3. The next area of resistance is around 153.2 and 154.0, while 1st support
hits today at 151.8 and below there at 151.3.

BEANOIL (DEC) 10/15/2004: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The market’s short-term trend is negative as the close remains
below the 9-day moving average. A positive setup occurred with the close over
the 1st swing resistance. The near-term upside objective is at 20.91. The next
area of resistance is around 20.75 and 20.91, while 1st support hits today at
20.25 and below there at 19.91.

 

WHEAT MARKET RECAP

10/14/2004

December Wheat finished up 2 at 314, 1 1/2 off the high and 3
1/4 up from the low. March Wheat closed up 1 1/2 at 324 3/4. This was 3 1/4 up
from the low and 1 off the high.

After the gap higher, new buying interest was
lacking and there was a wave of long liquidation selling from talk of the
overbought condition of the market and from the prospects for huge production
out of Europe. The 18 1/2 cent rally off of the Tuesday low left the trade a bit
concerned that a quick rally in prices could trigger a slowdown in export
demand. For the weekly export sales report, released before the opening, traders
are looking for wheat sales near 400,000-700,000 tons as compared with 803,700
tons last week. The Farm Minister of France raised the soft wheat crop estimate
by 391,000 tons from last month to 37.57 million tons which would be up 29.3%
from last years drought-reduced crop. A combination of the highest close since
September 29th and the hefty net short position of the fund traders coming into
the week has traders confident that fund short-covering should continue over the
near-term. December wheat support points come in at 308 1/4 and 306 1/4 with
resistance at 314 1/2 and 319 1/4.

Technical Outlook

WHEAT (DEC) 10/15/2004: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. A positive signal for trend short-term was given on a
close over the 9-bar moving average. The market has a slightly positive tilt
with the close over the swing pivot. The next upside target is 318 1/4. The next
area of resistance is around 316 1/4 and 318 1/4, while 1st support hits today
at 311 3/4 and below there at 309.

 

LIVE CATTLE RECAP

10/14/2004

December Live Cattle closed down 0.25 at 88.10.
This was 0.45 up from the low and 0.50 off the high.

November Feeder Cattle finished down 0.22 at
112.20, 0.55 off the high and 0.45 up from the low.

The outside-day down is a negative technical
development for the cattle market as the trade seems uncomfortable with the
premium structure of December cattle with weights already high and with a hefty
supply of total meat to absorb in the weeks just ahead. The trend in the cash
market, however, has been up and traders expect cash to trade higher this week.
Improving packer margins and strength in the beef market along with a tighter
showlist is expected to support the cash market. Packer bids came in at just
$82.00 in the panhandle with offers at $87.00 as compared with cash trade at
$83.00-$85.00 last week. Boxed-beef cutout values (600-750 choice) were up $.93
on the day at mid-session to $138.70 as compared with $131.31 last week at this
time.

Technical Outlook

CATTLE (DEC) 10/15/2004: A bearish signal was
triggered on a crossover down in the daily stochastics. Stochastics trending
lower at midrange will tend to reinforce a move lower especially if support
levels are taken out. The market’s close below the 9-day moving average is an
indication the short-term trend remains negative. 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 under the swing pivot. The next downside
objective is now at 87.170. The next area of resistance is around 88.570 and
89.050, while 1st support hits today at 87.650 and below there at 87.170.

 

LEAN HOGS RECAP

10/14/2004

December Lean Hogs closed up 0.17 at 64.85. This
was 0.55 up from the low and 0.40 off the high.

February Pork Bellies finished down 0.70 at
93.60, 0.70 off the high and 0.25 up from the low.

The hog market opened lower following the recent
trend in the cash market and news that live hogs were down $.50 on the session.
However, more speculative buying and short-covering after yesterday’s reversal
emerged to support a bounce. The December futures found some support from the
discount to the cash market with October futures expiring at noon at 71.95. The
December discount, however, has narrowed significantly in the past week due to
the sharp drop in the cash index and the Index is expected to continue to fall
into early next week. The CME 2-Day Lean Index for the period ending October
12th was reported at 73.79 which was down $.99 from the previous session. Packer
profit margins have been improving and the demand is also strong so there is
some hope that the cash market will begin to stabilize but traders remain
concerned with a hefty supply of all meat to absorb during late October and
November.

Technical Outlook

HOGS (DEC) 10/15/2004: 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 target is now at 63.870. The next area of resistance is
around 65.320 and 65.750, while 1st support hits today at 64.400 and below there
at 63.870.

 

COCOA MARKET RECAP

10/14/2004

December Cocoa finished up 22 at 1457, 23 off the
high and 13 up from the low.

The cocoa market surprised many in the trade with
a sharply higher opening especially after South Western Nigeria suggested that
they crop was coming in late but might that the crop might be good. Reports that
US cocoa imports for August declined by 9.5% from the prior month was offset by
news that the imports were up by more than 50% over last year. In short the made
influence on the market seemed to be concerns that the rebels were about to make
a fuss over the disarmament program. As suggested yesterday the rebels seem to
realize that raising tensions into the main crop harvest seems to get the most
attention.

Technical Outlook

COCOA (DEC) 10/15/2004: Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The close above
the 9-day moving average is a positive short-term indicator for trend. The
market setup is supportive for early gains with the close over the 1st swing
resistance. The next upside objective is 1495. The next area of resistance is
around 1475 and 1495, while 1st support hits today at 1439 and below there at
1424.

 

COFFEE MARKET RECAP

10/14/2004

December Coffee closed down 0.55 at 73.25. This
was 0.35 up from the low and 1.15 off the high.

It would appear that coffee prices were somewhat
oversold but the attempt to rally Thursday morning might have corrected the
oversold condition enough to allow more downside. We doubt that the trade gave
too much credence to the fact that Mexican coffee exports declined. Apparently
physical demand is still holding together as Brazil recently sold 98.8% of the
coffee offered for auction. However, since the Press noted spread action as a
key feature of the session it is clear that nothing major is currently driving
prices. US August coffee imports for August also showed a decline of nearly 5%
and that would seem to hint at slack demand and that seems to favor the bear
tilt already in place off Brazilian weather liquidation.

Technical Outlook

COFFEE (DEC) 10/15/2004: Daily stochastics are
trending lower but have declined into oversold territory. The close below the
9-day moving average is a negative short-term indicator for trend. The downside
closing price reversal on the daily chart is somewhat negative. The market’s
close below the pivot swing number is a mildly negative setup. The next downside
target is now at 72.00. The next area of resistance is around 74.00 and 74.95,
while 1st support hits today at 72.50 and below there at 72.00.

 

SUGAR MARKET RECAP

10/14/2004

March Sugar closed up 0.13 at 9.25. This was 0.17
up from the low and 0.01 off the high.

March sugar opened unchanged on the session but
found solid buying support to close 13 higher on the day. The rejection of the
late September-early October consolidation period is seen as a bullish technical
development. At their weekly tender, the EU sold 81,250 tons of white sugar
which was in line with trade expectations at 50,000-100,000 tons. French sugar
production is expected to reach 4.0-4.1 million tons from 3.9 million tons last
year according to the president of the National Union of French Sugar
Manufactures.

Technical Outlook

SUGAR (MAR) 10/15/2004: Momentum studies are
trending lower from high levels which should accelerate a move lower on a break
below the 1st swing support. The market’s short-term trend is positive on the
close above the 9-day moving average. With the close over the 1st swing
resistance number, the market is in a moderately positive position. The next
downside objective is now at 9.03. The next area of resistance is around 9.34
and 9.39, while 1st support hits today at 9.16 and below there at 9.03.

 

COTTON MARKET RECAP

10/14/2004

December Cotton finished up 0.57 at 46.52, 1.98
off the high and 0.07 up from the low.

December cotton forged what seemed to be an
aggressive failed auction rally but since the rally seemed to be mostly follow
through from the prior session the buying quickly ran out of momentum. In the
end the trade was reminded of massively large ending stocks projection and even
with the US noting an increase of 15% in Textile and Apparel imports for the
month of August. Continued concerns about the cost of polyester (oil based)
could mean that clothing will see a shift to larger cotton composition.
Apparently cash cotton prices were firm early Thursday and that created the
impression that the recent gains were justified. Export sales in cotton are
expected to be 100,000 to 175,000 bales and that compares to 180,000 bales last
week.

Technical Outlook

COTTON (DEC) 10/15/2004: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The market’s close below the 9-day moving average is an
indication the short-term trend remains negative. Follow through buying looks
likely if the market can hold yesterday’s gap on the day session chart. It is a
mildly bullish indicator that the market closed over the pivot swing number. The
near-term upside target is at 49.04. The next area of resistance is around 47.54
and 49.04, while 1st support hits today at 45.50 and below there at 44.95.