Here’s Why Cattle Is At Highest Level Since Mad Cow Scare

Technical Outlook

BONDS (JUN) 03/17/04: The outside day up and
close above the previous day’s high is a positive signal. The daily closing
price reversal up is positive. 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. Near-term resistance for bonds is at 116.22
and then again at 117.02, while swing support hits at 115.08 and below there at
114.06. The market’s close above the 9-day moving average suggests the
short-term trend remains positive. The daily stochastics have crossed over up
which is a bullish indication. The next upside target is 117.02. The 9-day RSI
over 70 indicates the market is approaching overbought levels.

T-NOTES(JUN) The outside day up is a positive
signal. The upside closing price reversal on the daily chart is somewhat
bullish. The daily stochastics gave a bullish indicator with a crossover up. The
near-term upside objective is at 117.03. With the close over the 1st swing
resistance number, the market is in a moderately positive position. The major
trend is down with the cross over back below the 40-day moving average.
Near-term resistance for the T-Notes is at 116.27 and then again at 117.03,
while swing support hits at 115.27 and below there at 115.03. The market’s
short-term trend is positive on a close above the 9-day moving average. With a
reading over 70, the 9-day RSI is approaching overbought levels.

 

STOCK INDICES RECAP

3/16/2004

The stock market did manage to hold above the
recent consolidation lows but since the Fed didn’t continue to promote the
recovery in the US economy many investors might be less committed to the long
side of the market. The housing numbers released early Tuesday were also
disappointing and that could prompt another layer of investors to leave the
fray. The rumor mill did generate some wild stories about Bin Laden being
captured and that issue could be in an out of the news heavily as the US
undertakes the spring offensive in the Pakistan/Afghanistan border region.

Technical Outlook

S&P500 (JUN) 03/17/04: It is a mildly bullish
indicator that the market closed over the pivot swing number. The upside closing
price reversal on the daily chart is somewhat bullish. Underlying support comes
in at 1104.30 and 1096.65, with overhead resistance at 1116.30 and 1120.65. The
market’s short-term trend is negative as the close remains below the 9-day
moving average. Daily stochastics are trending lower, but have declined into
oversold territory. The next downside objective is now at 1096.65.

S&P E-Mini (JUN): Daily stochastics declining
into oversold territory suggest the selling may be drying up soon. The next
downside objective is 1110.13. The market has a slightly positive tilt with the
close over the swing pivot. Near-term resistance for the S&P Mini is at 1111.00
and then again at 1111.13, while swing support hits at 1110.50 and below there
at 1110.13. A negative signal for trend short-term was given on a close under
the 9-bar moving average.

NASDAQ (JUN) The daily closing price reversal up
is positive. 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 lower than the pivot swing number. The market should run into
resistance at 1420.50 and above there at 1433.25 with support at 1395.50 and
1383.25. Momentum studies are declining, but have fallen to oversold levels. The
next downside target is 1383.3.

MINI DOW (JUN) The market’s close below the 9-day
moving average is an indication the short-term trend remains negative. The
market should run into resistance at 10229 and above there at 10270 with support
at 10111 and 10034. Momentum studies are declining, but have fallen to oversold
levels. The next downside target is 10034. A positive setup occurred with the
close over the 1st swing resistance.

 

CURRENCY MARKET RECAP

3/16/2004

The Dollar Index showed significant back and
forth two sided trade Tuesday with the early weakness erased into mid session
and then the market generally finishing weak following the statements from the
US Federal Reserve. Because the Fed failed to continue the cheerleader role on
the issue of the US jobs recovery we would have to think that the Dollar might
pick up Wednesday where it started early Tuesday and that was near a downside
breakout. The Yen and the Pound continue to make the most of the Dollar weakness
with the Euro really making a failed rally attempt. Once against the Dollar and
the Euro seem to be unable to mount sustained upside action.

Technical Outlook

YEN (JUN): The market’s close above the 9-day
moving average suggests the short-term trend remains positive. A positive setup
occurred with the close over the 1st swing resistance. Swing resistance is
targeted at 92.61 and above there at 92.85, with the yen finding support around
91.84 and below there at 91.31. The close under the 40-day moving average
indicates the longer-term trend could be turning down. Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The next upside
target is 92.85. Short-term indicators suggest buying dips today.

EURO (JUN): Momentum studies are trending higher
from mid-range which should support a move higher if resistance levels are
penetrated. The near-term upside objective is at 1.2374. The market is in a
bearish position with the close below the 2nd swing support number. Swing
support for the Euro comes in at 1.2134, with overhead resistance at 1.2374. The
market’s short-term trend is negative as the close remains below the 9-day
moving average. The major trend is down with the cross over back below the
40-day moving average. The gap down on the day session chart is bearish with
more selling pressure possible today.

 

PRECIOUS METALS RECAP

3/16/2004

The Fed statements Tuesday didn’t seem to foster
buying interest in the gold market and therefore the bullish bias posted by the
gold during the session might be able to stay in place until the opening
Wednesday. Some traders expressed concern that the economy wasn’t showing
expansion as in previous meeting and that might disappoint some would-be
inflation buyers. However, the gold and silver market has not seen a significant
impact from the ebb and flow of inflation prospects. Nothing in the action
Tuesday would seem to suggest that gold will reduce its straight line focus on
the Dollar.

Technical Outlook

SILVER (MAY): With the close higher than the
pivot swing number, the market is in a slightly bullish posture. Initial support
for silver is at 712.5 and below there at 708.2 with resistance likely at 717.6
and 721.0. The market’s close above the 9-day moving average suggests the
short-term trend remains positive. Studies are showing positive momentum, but
are now in overbought territory so some caution is warranted. The next upside
target is 717.6.

GOLD (APR): Support for gold today comes in near
397.65, while resistance is pegged at 407.25. Momentum studies are trending
higher from mid-range which should support a move higher if resistance levels
are penetrated. The near-term upside objective is at 407.25. Consider buying
pull-backs since daily studies are bullish. With the close over the 1st swing
resistance number, the market is in a moderately positive position. The upside
crossover (9 above 18) of the moving averages suggests a developing short-term
uptrend.

 

COPPER MARKET RECAP

3/16/2004

The copper market at times Tuesday showed
significant upside capacity but failed to hold all of the gains. However, news
that a Spanish copper facility would see a 50,000 ton production loss due to
maintenance combined with ongoing fund buying interest to push copper prices to
another quasi upside breakout on the charts. So far, the macro economic lookout
would seem to conflict with the current copper prices but recent price action
seems to suggest that copper is immune to the bigger picture fundamentals. We
still are not detecting persistent Chinese cash purchases as were seen in the
early January and February time frame and that could mean that the market is
moving higher on a diet of spec and fund interest.

 

ENERGY MARKET RECAP

3/16/2004

The energy complex was mostly lower with the
market banking some long profits and some specs decided to exit rather than
weather the upcoming US weekly inventory stats. The Kuwaiti Oil Minister
suggested that the upcoming production cut decision stands which is noting new
but in general provides support against further profit taking. With some spot
crude prices weakening there appears to be a near term corrective potential but
traders in general are not willing to discard the existing bull trend even if
the near term information fosters some price weakness.

Technical Outlook

CRUDE OIL (MAY): The daily closing price reversal
down puts the market on the defensive. It is a mildly bullish indicator that the
market closed over the pivot swing number. Support for crude is keyed on 36.36
and below there at 36.00, with resistance pegged at 37.01 and 37.30. The
market’s short-term trend is positive on a close above the 9-day moving average.
Momentum studies are trending higher, but have entered overbought levels. The
near-term upside objective is at 37.30.

UNLEADED GAS (MAY): Positive momentum studies in
the neutral zone will tend to reinforce higher price action. The next upside
target is 113.66. With the close higher than the pivot swing number, the market
is in a slightly bullish posture. Resistance today is at 113.66, while support
should be found around 110.06. The downside closing price reversal on the daily
chart is somewhat negative. The moving average crossover up (9 above 18)
indicates a possible developing short-term uptrend.

HEATING OIL (MAY):It is a mildly bullish
indicator that the market closed over the pivot swing number. Heating oil should
encounter support around 88.74, with resistance is at 92.14. The market’s
short-term trend is positive on a close above the 9-day moving average. The
daily stochastics gave a bullish indicator with a crossover up. The near-term
upside objective is at 92.14.

 

CORN MARKET RECAP

3/16/2004

The market moved to new contract highs and new 6
1/2 year highs for the nearby futures early in the session followed by the lower
close leaves the market vulnerable to a bearish technical reaction on Wednesday
to the downside closing price reversal. Funds and commercials were noted sellers
into the close. Speculators are holding a record net long position which leaves
the market vulnerable to long liquidation selling if support points are
violated. There was a lack of new buying to support a follow-through move after
the early contract highs. The optional origin purchase by South Korea overnight
of 20,000-25,000 tons has traders believing that China may be selling some corn
on the world market after recent purchases have been of US corn. The size of the
order has traders thinking the purchase is China or India. The market was also
under some light long liquidation pressure on ideas that futures are overbought
and from a softer tone to the country basis after some producer selling emerged
late yesterday on the rally. CBOT deliverable stocks as of March 12th totaled
6.905 million bushels as compared with 7.015 million last week and 7.828 million
last year.

Technical Outlook

CORN (MAY) 03/17/04: Momentum studies are
trending higher, but have entered overbought levels. The near-term upside
objective is at 310 1/4. The market’s close below the pivot swing number is a
mildly negative setup. Market resistance comes in at 310 1/4 today, with support
at 301 1/4. The market’s short-term trend is positive on a close above the 9-day
moving average. The daily closing price reversal down puts the market on the
defensive.

 

SOY COMPLEX RECAP

3/16/2004

Commercial buying was noted in soybeans and meal
and meal/oil spreading was active as futures continue to attract active buying
from speculators as well. New contract highs and new 15 1/2 year highs for
nearby futures has added to the speculative buying spree in soybeans as talk of
declining production estimates for the South American crops and higher trade in
China helped to support the early gains. In addition, the Brazil export
inspectors are still on strike for the second day and this is yet another factor
which could disrupt an orderly flow freshly harvested soybeans onto the world
market. The export and crush pace in the US are already well ahead of the USDA
forecasts and there is growing concerns that the hefty usage pace will eat into
already low (27-year lows) ending stock forecasts. Meal was sharply higher as
there is still no sign of a slowdown in feed demand in the US and Asian feed
demand is on the rise as countries attempt to rebuild poultry flocks to pre-bird
flu levels. Oil pushed lower from the meal/oil spread activity and from the
downside reversal action in palm oil overnight. Deliverable stocks as of March
12th were at 9.854 million bushels as compared with 10.145 million the previous
week and 2.681 million bushels last year.

Technical Outlook

SOYBEANS (MAY) 03/17/04: 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 area of resistance
is around 999 1/2 and 1008 3/4, while 1st support hits today at 978 1/2 and
below there at 966 1/4. The market’s close above the 9-day moving average
suggests the short-term trend remains positive. Studies are showing positive
momentum, but are now in overbought territory so some caution is warranted. The
next upside target is 1008 3/4. The 9-day RSI over 70 indicates the market is
approaching overbought levels.

MEAL (MAY): Momentum studies are trending higher,
but have entered overbought levels. The near-term upside objective is at 310.2.
First resistance comes in at 306.3, with support at 298.0. The market’s
short-term trend is positive on a close above the 9-day moving average. The
market’s close above the 2nd swing resistance number is a bullish indication.
With a reading over 70, the 9-day RSI is approaching overbought levels.

BEAN OIL (MAY): The market’s close above the
9-day moving average suggests the short-term trend remains positive. Positive
momentum studies in the neutral zone will tend to reinforce higher price action.
The next upside target is 34.10. It is a slightly negative indicator that the
close was lower than the pivot swing number. The downside closing price reversal
on the daily chart is somewhat negative. Daily swing resistance is found at
33.80 and above there at 34.10. Support should be encountered at 33.35 and
33.20.

 

WHEAT MARKET RECAP

3/16/2004

The lower close after an impressive morning rally
is disappointing to the bulls and could attract some long liquidation selling
due to weak technical action. News that the US sold 110,000 tonnes of wheat to
Iraq helped to provide early support as this was the first sale to Iraq since
the late 1990’s. In addition, the weather forecast combined with the oversold
condition of the market helped support some light commercial buying and
short-covering from speculators. In Kansas, crops rated in good to excellent
condition fell to 32% from 35% last week and 40% two weeks ago. Crops rated poor
to very poor came in at 36% from 34% last week and 32% two weeks ago. Eastern
Kansas, Oklahoma and Nebraska received good rains recently but more rain will be
necessary in western Kansas to help the freshly sprouted crop improve, however,
warm and dry weather could quickly hurt the delicate crop in western areas of
the state. Kansas State Agronomists indicated that the recent rains could by a
few weeks time in the western parts of the state but more rains are needed to
expect a significant recovery from the poor start to the season. The drought
monitor from NOAA indicated that western Kansas, eastern Colorado and
southwestern Nebraska are plagued with “extreme drought” conditions as of March
9th. Oklahoma crops are rated 53% in good to excellent condition. There is only
light rain expected for eastern Kansas this week and the National Weather
Service 6-10 day and 8-14 day forecast models call for above normal temperatures
and below normal precipitation for the winter wheat regions. If verified, crop
conditions are likely to decline further. With just over 1 million tons of China
wheat on the books for the old crop season but still unshipped, traders continue
to watch for signs of increased activity.

Technical Outlook

WHEAT (MAY) 03/17/04: The downside closing price
reversal on the daily chart is somewhat negative. With the close higher than the
pivot swing number, the market is in a slightly bullish posture. Look for
near-term support at 369 and below there at 367 1/2, with resistance levels at
374 1/2 and 378 1/2. The market’s close above the 9-day moving average suggests
the short-term trend remains positive. Daily stochastics are showing positive
momentum from oversold levels which should reinforce a move higher if near-term
resistance is taken out. The next upside target is 378 1/2.

 

LIVE CATTLE RECAP

3/16/2004

April cattle closed 177 higher on the session and
moved to the highest level since prior to the mad cow discovery as a positive
tone towards this weeks cash trade and the futures discount to cash encouraged
new buying and short covering across the board. Cash bids emerged at $85 today
but offers were up at $89 as compared with $87-88 trade last week. For the
Cattle-on-Feed report on Friday, traders are looking for on-feed supplies for
March 1st to come in near 103.8% of last year (range 103-105), February
placements at 96.2% (range 90.6-102.6) and February marketings at 98.6%
(95.9-100.5).

Technical Outlook

CATTLE (APR) 03/17/04: The daily stochastics have
crossed over up which is a bullish indication. The next upside target is 83.80.
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.
Support should be encountered at 81.87 and below there at 80.80. Market
resistance is at 83.37 and then again at 83.80. The market’s close above the
9-day moving average suggests the short-term trend remains positive. The 9-day
RSI over 70 indicates the market is approaching overbought levels.

 

LEAN HOGS RECAP

3/16/2004

The market surge higher and moved into new
contract highs with April hogs closing 117 higher on the day to 65.30. Cash hogs
were $1.00 higher at most locations and traders remain confident that pork
exports will continue at a swift clip over the near-term. Poor weather for
producer movement helped support the cash markets but aggressive fund buying and
strength in cattle seemed to be the bullish forces for the session. The weekly
cold storage report, released this afternoon, is expected to show belly movement
anywhere from a decline of 200,000 pounds to an increase of 600,000 pounds in
cold storage. The CME 2-Day Lean index was up 5 cents to 64.87 as compared with
62.03 on March 1st.

Technical Outlook

HOGS (APR) 03/17/04: With the close over the 1st
swing resistance number, the market is in a moderately positive position.
Resistance levels comes in at 65.80 and 66.10 today, while support is around
64.80 and then 64.05. The market’s short-term trend is positive on a close above
the 9-day moving average. Momentum studies are trending higher, but have entered
overbought levels. The near-term upside objective is at 66.10. With a reading
over 70, the 9-day RSI is approaching overbought levels.

 

COCOA MARKET RECAP

3/16/2004

The cocoa market mounted another surprise rally
Tuesday but might have done so off the news that Ivory Coast cocoa exports
declined in the October through February time frame and that plays into the idea
that arrival rates are beginning to slow. In fact, cocoa bean exports from the
Ivory Coast saw a 24% decline in the October through February time frame and
that would seem to be a big number. With the Press reporting Industry buying in
the action Tuesday, that would seem to provide support to the fundamental case
in cocoa.

Technical Outlook

COCOA (MAY)03/17/04 The market has a bullish tilt
coming into today’s trade with the close above the 2nd swing resistance. Cocoa
should run into resistance at 1499 and above there at 1517 with support at 1449
and 1417. The daily stochastics have crossed over up which is a bullish
indication. The next upside target is 1516.50.

 

COFFEE MARKET RECAP

3/16/2004

The market opened lower on bearish news of
increased US Green coffee stocks but the ability to close higher on bearish news
underscores the solid uptrend in coffee. July coffee closed 45 higher on the
session with the highest close since January 28th. Origin selling was noted to
cap the gains but fund buyers were aggressive for much of the session. Traders
believe that funds are now holding a record net long position (options and
futures combined) of over 30,000 contracts. Coffee exports from Mexico, Central
America, Colombia, Peru and Dominican Republic for February were reported at
2.510 million bags, up 5.6% from last year. Daily exchange stocks were up 7,142
bags to 4.602 million bags with 65,926 bags pending review.

Technical Outlook

COFFEE (MAY)3/17/04 The market has a slightly
positive tilt with the close over the swing pivot. Studies are showing positive
momentum, but are now in overbought territory so some caution is warranted. The
near-term upside objective is at 81.10.The Coffee contract should run into
resistance at 79.50 and above there at 81.10 with support at 76.3 and 74.70. The
market’s short-term trend is positive on a close above the 9-day moving average.

 

SUGAR MARKET RECAP

3/16/2004

May sugar close higher for the 9th session in a
row as fund buyers continue to flood the market on only minor inter-day
corrective breaks. May sugar closed 6 higher on the session and to a new 7-month
high. Talk of lower crops in Thailand and India and a slight world production
deficit for the 2003/2004 season continues to support. Traders await tenders
from Iraq and Syria and cash dealers are seeing increased interest from end
users to book needs after missing out on lower prices mid-February. The US filed
a WTO case against Mexico against the two year old domestic tax on corn syrup
for the soft drink industry. A trade house in Brazil released an estimate for
center-south cane production at 318 million tons from last years 298.5 million
tons due to increased planted acreage. While yields are expected to be down from
weather, sugar production is still expected to reach 22.4 million tons in the
region from 20.4 million tons last year.

Technical Outlook

SUGAR (MAY) 03/17/04: It is a mildly bullish
indicator that the market closed over the pivot swing number. Swing resistance
comes in at 6.92, with support found at 6.62. The market’s short-term trend is
positive on a close above the 9-day moving average. Momentum studies are
trending higher, but have entered overbought levels. The near-term upside
objective is at 6.92. With a reading over 70, the 9-day RSI is approaching
overbought levels.

 

COTTON MARKET RECAP

3/16/2004

May and July Cotton closed slightly higher and
December lower in choppy trade as light trade selling was noted overhead and
helped to offset the light speculative buying. May gapped higher showing good
follow-through technical buying from Monday’s reversal but the buying slowed
quickly and the market settled into a quiet range. New crop futures remain under
pressure from expectations of surging world production in 2004 in spite of talk
of lost acreage in the south due to a price incentive to plant soybeans.

Technical Outlook

ORANGE JUICE (MAY)3/17/04 The market has a slightly positive tilt with the
close over the swing pivot. Orange Juice should run into resistance at 62.90 and
above there at 63.40 with support at 61.80 and 61.20. The market’s short-term
trend is negative as the close remains below the 9-day moving average. Negative
momentum studies in the neutral zone will tend to reinforce lower price action.
The next downside objective is now at 61.2.

COTTON (MAY) 03/17/04: The market’s close below
the 9-day moving average is an indication the short-term trend remains negative.
With the close higher than the pivot swing number, the market is in a slightly
bullish posture. Next resistance area comes in at 66.37 and then again at 66.91,
while support is targeted at 65.22 and 64.61. The daily stochastics have crossed
over up which is a bullish indication. The next upside target is 66.91.