Here’s Why The Upside Action In Bonds Could Be Short-Lived

 

BOND MARKET RECAP

3/10/2005

March Bonds finished up 0-17 at 111-12, 0-04 off
the high and 0-30 up from the low.

March 10 Yr Treasury Notes finished up 0-095 at
109-070, 0-030 off the high and 0-160 up from the low.

The combination of weaker oil prices and a
surprise +17,000 gain in the weekly initials claims improved the mood in the
bond market. The June bond had become over sold on a break toward 110 and
positioning ahead of the 10 year note auction also supported prices. Demand at
the auction came in slightly below average, but did not seem to have a direct
negative impact on futures. The upside action in bonds could be short lived if
Friday’s trade balance shows a wider than expected deficit that triggers another
wave of Dollar selling. A weaker Dollar raises concerns that foreign Central
Banks will diversify reserves out of Dollar assets.

Technical Outlook

BONDS (JUN) 03/11/2005: 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 close under the 18-day moving average indicates the longer-term
trend could be turning down. The upside daily closing price reversal gives the
market a bullish tilt. The market has a slightly positive tilt with the close
over the swing pivot. The near-term upside target is at 112-13. The next area of
resistance is around 111-30 and 112-13, while 1st support hits today at 110-20
and below there at 109-24.

TNOTES (JUN) 03/11/2005: The daily stochastics
gave a bullish indicator with a crossover up. The stochastics indicators are
rising from oversold levels, which is bullish and should support higher prices.
The major trend has turned down with the cross over back below the 18-day moving
average. The upside daily closing price reversal gives the market a bullish
tilt. It is a mildly bullish indicator that the market closed over the pivot
swing number. The near-term upside objective is at 109-250. The market is
approaching oversold levels on an RSI reading under 30. The next area of
resistance is around 109-165 and 109-250, while 1st support hits today at
108-250 and below there at 108-095.

 

STOCK INDICES RECAP

3/10/2005

March S&P finished up 2.8 at 1214.2, 2 off the
high and 8.5 up from the low.

March S&P E-Mini closed up 3 at 1214.5. This was
9 up from the low and 1.75 off the high.

March Dow closed up 43 at 10873. This was 68 up
from the low and 27 off the high.

After early weakness, the March S&P was able to
recover helped by a steady Dollar and weaker energy prices. Weekly initial
claims came in at +17,000 which was sharply above market expectations and
suggests job growth in March may have slowed. Lower energy prices took some of
the inflation heat off stock, but crude oil prices still sit comfortably above
$50/barrel.

Technical Outlook

S&P 500 (JUN) 03/11/2005: Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. 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. It is a
slightly negative indicator that the close was under the swing pivot. The next
downside objective is 1202.08. The next area of resistance is around 1219.45 and
1223.07, while 1st support hits today at 1208.95 and below there at 1202.08.

SP EMINI (JUN) 03/11/2005: Negative momentum
studies in the neutral zone will tend to reinforce lower price action. 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 market’s close below the pivot
swing number is a mildly negative setup. The next downside objective is 1201.94.
The next area of resistance is around 1219.87 and 1223.43, while 1st support
hits today at 1209.13 and below there at 1201.94.

NASDAQ (JUN) 03/11/2005: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The close below the 18-day moving average is an indication the
longer-term trend has turned down. The market’s close below the pivot swing
number is a mildly negative setup. The next upside objective is 1554.50. The
next area of resistance is around 1546.50 and 1554.50, while 1st support hits
today at 1522.50 and below there at 1506.50.

 

CURRENCY MARKET RECAP

3/10/2005

March US Dollar finished down 6 at 8152, 22 off
the high and 20 up from the low.

March Euro finished up 0.26 at 134.55, 0.26 off
the high and 0.3 up from the low.

March Euro Dollar closed unchanged at 96.545.
This was 0.02 up from the low and 0.005 off the high.

March Canadian Dollar closed down 0.02 at 83.17.
This was 0.2 up from the low and 0.27 off the high.

March British Pound finished down 0.38 at 191.29,
0.51 off the high and 0.15 up from the low.

March Swiss closed up 0.3 at 87.21. This was 0.19
up from the low and 0.14 off the high.

March Japanese Yen closed down 0.23 at 96.78.
This was 0.13 up from the low and 0.24 off the high.

The Dollar traded mostly lower as the currency
never really recovered from comments by Japan’s Prime Minister saying the
country should diversify reserves out of Dollar denominated securities. While
Japan’s Finance Minister tried to retract the PM statements the damage was done
and the Dollar was never able to shake from the bear’s grip. The trade may have
been pricing in a wider than estimated trade balance figure to be released
Friday morning.

Technical Outlook

YEN (JUN) 03/11/2005: The close under the 40-day
moving average indicates the longer-term trend could be turning down. Momentum
studies are trending higher from mid-range, which should support 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. It is a slightly negative
indicator that the close was under the swing pivot. The near-term upside
objective is at 97.17. The next area of resistance is around 96.96 and 97.17,
while 1st support hits today at 96.60 and below there at 96.44.

EURO (JUN) 03/11/2005: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The cross over and close above the 18-day moving average is an
indication the longer-term trend has turned positive. It is a mildly bullish
indicator that the market closed over the pivot swing number. The near-term
upside objective is at 135.10. The market is becoming somewhat overbought now
that the RSI is over 70. The next area of resistance is around 134.83 and
135.10, while 1st support hits today at 134.27 and below there at 133.98.

 

PRECIOUS METALS RECAP

3/10/2005

April Gold closed up 0.5 at 443.4. This was 2.2
up from the low and 0.3 off the high.

March Silver finished down 0.113 at 7.527, 0.073
off the high and 0.032 up from the low.

 

April gold closed near the high of the day
Thursday and with prices holding above $440, the market remains in a strong
technical position to move higher. Fund profit taking pressured the market
early, but it appeared traders did not want to go home short gold in front of
the US trade balance data out Friday morning as a wider than expected deficit
could trigger renewed selling against the Dollar. Gains in the Euro also
supported gold.

Technical Outlook

SILVER (MAY) 03/11/2005: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The cross over and close above the 18-day moving average is an
indication the longer-term trend has turned positive. The close below the 1st
swing support could weigh on the market. The next upside objective is 764.2. The
next area of resistance is around 758.0 and 764.2, while 1st support hits today
at 747.5 and below there at 743.3.

GOLD (APR) 03/11/2005: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The cross over and close above the 18-day moving average indicates
the longer-term trend has turned up. With the close higher than the pivot swing
number, the market is in a slightly bullish posture. The near-term upside target
is at 445.4. With a reading over 70, the 9-day RSI is approaching overbought
levels. The next area of resistance is around 444.6 and 445.4, while 1st support
hits today at 442.2 and below there at 440.5.

 

COPPER MARKET RECAP

3/10/2005

March Copper closed down 0.75 at 149.60. This was
2.10 up from the low and 0.25 off the high.

May copper cut losses by the end of the Day as
the Dollar turned lower and the market held a test of support near 147.50. With
fund traders holding a net long position near record levels, the market will
likely need to see another throttle lower in the Dollar to push the market
through resistance between 151 and 152.10. The International Copper Study Group
reported a wider world copper deficit in 2004 vs 2003. However, producers are
expected to expand production in the second half of the year which could narrow
the deficit forecast for this year.

 

ENERGY MARKET RECAP

3/10/2005

April Crude Oil closed down 1.12 at 54.26. This
was 0.65 up from the low and 0.94 off the high.

April Heating Oil closed down 2.56 at 147.34.
This was 2.34 up from the low and 1.66 off the high.

April Unleaded Gas finished down 4.41 at 152.06,
3.44 off the high and 0.96 up from the low.

April Natural Gas finished down 0.12 at 6.87,
0.20 off the high and 0.07 up from the low.

April Propane closed down 0.01 at 0.86. This was
equal to the low and 0.02 off the high.

Speculators decided to take some profits Thursday
as a higher than expected gains in API/EIA crude stocks and technical signals at
extremes shook some weak longs from the market. While the rise in US crude
stocks showed the market to be well supplied now, robust global demand is
expected to whittle away supplies as the year progresses. Supply constraints
will likely limit any further downside correction in energy prices. The Algerian
oil minister said that OPEC has no extra production capacity while a private
shipping consulting company estimated that OPEC will ship 130,000 barrels per
day less oil for the month as of March 26th as compared to the same period last
month.

Technical Outlook

CRUDE OIL (MAY) 03/11/2005: 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 market’s close below the 1st swing support number suggests
a moderately negative setup for today. The next downside objective is 52.75. The
next area of resistance is around 55.05 and 55.92, while 1st support hits today
at 53.47 and below there at 52.75.

UNLEADED (MAY) 03/11/2005: 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 major trend could be turning up with the close
back above the 18-day moving average. The defensive setup, with the close under
the 2nd swing support, could cause some early weakness. The next downside
objective is now at 148.28. The next area of resistance is around 154.26 and
157.08, while 1st support hits today at 149.86 and below there at 148.28.

HEATING OIL (MAY) 03/11/2005: The daily
stochastics gave a bearish indicator with a crossover down. 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 market’s close below the 1st swing support number suggests
a moderately negative setup for today. The next downside objective is 143.17.
The market is becoming somewhat overbought now that the RSI is over 70. The next
area of resistance is around 149.34 and 151.17, while 1st support hits today at
145.34 and below there at 143.17.

 

CORN MARKET RECAP

3/10/2005

May Corn finished up 3 3/4 at 220, 1/2 off
the high and 5 1/2 up from the low. December Corn closed up 3 at 241 1/2. This
was 5 up from the low and 1 off the high.

After initial weakness associated with the
bearish USDA report news, fund buyers emerged to drive the market moderately
higher into the close. The USDA pegged ending stocks for corn for the 2004/2005
season at 2.055 billion bushels as compared with the average trade estimate of
2.058 billion bushels. Exports were revised lower by 50 million bushels which
was expected. World corn ending stocks for the 2004/2005 season were revised
higher to 122.04 million tons from 117.27 last month and 98.12 million tons last
year. Argentina production was revised higher by 2 million tons and Brazil lower
by 2 million tons. Traders expected a bigger cut in Brazil production and did
not look for jumps from South Africa and Mexico to push world production to
706.37 million tons from last months estimate of 701.82 million tons. The US
news was expected but the world report has a bearish tilt. Weekly export sales
report came in at 743,700 tons as compared with trade expectations at
650,000-850,000 tons. Cumulative sales have reached 64.4% of the new USDA
forecast for the season as compared with 64.1% on average for this time of the
year. There were only 8 contracts delivered against the March contract this
morning. Support for May corn comes in at 215 1/2 with resistance at 224.

Technical Outlook

CORN (MAY) 03/11/2005: Stochastics trending lower
at midrange will tend to reinforce a move lower especially if support levels are
taken out. The cross over and close above the 18-day moving average is an
indication the longer-term trend has turned 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. The next downside objective is
now at 212 3/4. The next area of resistance is around 223 and 224 3/4, while 1st
support hits today at 217 and below there at 212 3/4.

 

SOY COMPLEX RECAP

3/10/2005

May Soybeans finished up 9 3/4 at 639 1/4, 3/4
off the high and 14 1/4 up from the low. November Soybeans closed up 9 at 624
1/2. This was 9 1/2 up from the low and 1/2 off the high.

May Soymeal closed up 3.4 at 185.1. This was 4.1
up from the low and equal to the high.

March Soybean Oil finished down 0.05 at 23.55,
0.05 off the high and 0.35 up from the low.

May soybeans closed at the highest level since
September 2nd as fund traders emerged after the lower opening to support the
grain markets across the board. The market was called higher on the opening but
there was a general feeling that futures were overbought after the recent
strength and with rains in the forecast for southern Brazil for the weekend and
concerns that the Brazil harvest is advancing, some long liquidation selling hit
the market early. The USDA pegged ending stocks at 410 million bushels as
compared with the average trade estimate of 430 million bushels and 440 million
last month. Exports were revised higher which supported the lower ending stocks
forecast. Brazil production was revised down to 59 million tons from 63 million
last month which pushed world ending stocks down to 55.98 million tons from
61.35 million last month and 37.45 million tons last year. The previous record
high world ending stocks was 40.65 million tons. The drop in US ending stocks
was greater than traders expected and the market may find further support from
expectations of even lower Brazil production for next months report. Weekly
export sales for soybeans, also released before the opening, came in at 756,400
tons as compared with trade expectations at 500,000-700,000 tons. Cumulative
sales have reached 90.7% of the new USDA forecast for the season as compared
with 87.4% on average for this time of the year. Meal sales were 140,600 tons as
compared with trade expectations at 50,000-100,000 tons. Cumulative sales have
reached 741% of the new USDA forecast for the season as compared with 70.6% on
average for this time of the year. Oil sales were 1500 tons from expectations at
3,000-8,000 tons. Deliveries against the March contracts this morning totaled 76
lots for soybeans, 211 for oil and 232 contracts for meal. The hefty product
deliveries could pressure the cash market. Resistance for May soybeans comes in
at 647 and 632.

Technical Outlook

BEANS (MAY) 03/11/2005: Momentum studies are
trending higher but have entered overbought levels. The cross over and close
above the 18-day moving average is an indication the longer-term trend has
turned positive. The market’s close above the 2nd swing resistance number is a
bullish indication. The next upside objective is 650 3/4. With a reading over
70, the 9-day RSI is approaching overbought levels. The next area of resistance
is around 646 3/4 and 650 3/4, while 1st support hits today at 631 3/4 and below
there at 621.

MEAL (MAY) 03/11/2005: Momentum studies are
trending lower from high levels which should accelerate a move lower on a break
below the 1st swing support. The market now above the 18-day moving average
suggests the longer-term trend has turned up. 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 target is now at
183.3. The market is becoming somewhat overbought now that the RSI is over 70.
The next area of resistance is around 191.0 and 192.2, while 1st support hits
today at 186.6 and below there at 183.3.

BEANOIL (MAY) 03/11/2005: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The major trend could be turning up with the close back above the 18-day
moving average. The market has a slightly positive tilt with the close over the
swing pivot. The near-term upside target is at 24.07. With a reading over 70,
the 9-day RSI is approaching overbought levels. The next area of resistance is
around 23.89 and 24.07, while 1st support hits today at 23.43 and below there at
23.14.

 

WHEAT MARKET RECAP

3/10/2005

May Wheat finished up 7 1/4 at 348, 1/2 off the high and 14 up
from the low. July Wheat closed up 7 1/2 at 355. This was 14 up from the low and
1 off the high.

May wheat pushed to a new high for the move and
to the highest level since September as fund buying was active again. For the
Supply/Demand report the USDA pegged ending stocks for wheat at 553 million
bushels as compared with 558 million last month and trade expectations which
averaged near 554 million. Exports were revised higher by 25 million bushels but
food usage revised lower by 20 million bushels. Food usage is now estimated at
890 million bushels as compared with 907 million bushels last year and 919
million bushels two years ago. Perhaps the low carb fad has turned into a low
carb trend. The US report was neutral against trade expectations but the world
report showed another increase in production to a record 623.77 million tons, up
1.58 million tons from last month and up 80 million tons from last year. As a
result, world wheat ending stocks were revised slightly higher to 146.78 million
tons from 145.38 million last month and 131.05 million tons last year. Weekly
export sales came in at 352,900 tons as compared with trade expectations at
275,000-425,000 tons. Cumulative sales have reached 86.1% of the new USDA
forecast for the season as compared with 80.8% on average for this time of the
year. Deliveries against the March contract totaled 147 contracts this morning
with a strong commercial stopper taking 137 of the total. May wheat support
comes in at 342 with resistance at 352 1/2.

Technical Outlook

WHEAT (MAY) 03/11/2005: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The cross over and close above the 18-day moving average is an
indication the longer-term trend has turned positive. A positive signal was
given by the outside day up. The market’s close above the 2nd swing resistance
number is a bullish indication. The near-term upside target is at 359. The
market is approaching overbought levels with an RSI over 70. The next area of
resistance is around 355 1/4 and 359, while 1st support hits today at 340 3/4
and below there at 330 1/4.

 

LIVE CATTLE RECAP

3/10/2005

April Live Cattle finished down 0.75 at 90.70,
0.85 off the high and 0.10 up from the low.

March Feeder Cattle closed down 0.32 at 105.55.
This was 0.27 up from the low and 0.45 off the high.

June cattle closed moderatly lower on the session
but managed to hold on to most of yesterdays strong gains and managed to bounce
50 points off of the lows into the close. Futures were oversold after closing
higher for session in a row. Strong cash markets this week and the discount of
futures to the cash market going into the March 7th Canadian border opening
helped drive futures higher over the past week as it appears that it will be
months before the border opens. In addition, traders are optimistic over
potential progress with Japan on allowing imports of US beef this week.
Boxed-beef cut-out values at mid-session were up $.50 to $153.56 as compared
with $141.99 last week. Slaughter came in at 121,000 head from trade
expectations for 116,000-120,000 head.

Technical Outlook

CATTLE (APR) 03/11/2005: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The major trend could be turning up with the close back above the 18-day
moving average. The market’s close below the pivot swing number is a mildly
negative setup. The next upside objective is 91.820. The market is becoming
somewhat overbought now that the RSI is over 70. The next area of resistance is
around 91.150 and 91.820, while 1st support hits today at 90.250 and below there
at 89.950.

 

LEAN HOGS RECAP

3/10/2005

April Lean Hogs finished down 2.00 at 72.57, 1.22
off the high and equal to the low.

March Pork Bellies closed down 0.80 at 85.50.
This was 0.90 up from the low and 0.55 off the high.

The market closed sharply lower for the second
day in a row as fund traders emerged as aggressive sellers again today. Cash
markets were at least $1.00 lower and packer profit margins dipped deeper into
the red. Poor margins have caused a packer led cut-back in slaughter and should
cause further cash weakness into early next week. Pork cut-out values were lower
on Wednesday night due to sharply lower loin prices and commercial traders
believe that ham prices should come down in the next week or so which could pull
cut-out values lower into next week. The 2-day lean index for the period ending
March 8th came in at 72.98, up.92 on the session and up from 70.27 last week at
this time. Traders believe the index will drop-off into next week. Slaughter
came in at 376,000 head from trade expectations for 380,000-388,000 head. This
is the third session in a row in which slaughter came in well below expectations
which suggest poor demand.

Technical Outlook

HOGS (APR) 03/11/2005: The major trend has turned
down with the cross over back below the 60-day moving average. Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. The market back below the 18-day moving average suggests the longer-term
trend could be turning down. The gap lower on the day session chart is bearish
and puts the market on the defensive. There could be some early pressure today
given the market’s negative setup with the close below the 2nd swing support.
The next downside objective is now at 71.670. The next area of resistance is
around 73.170 and 74.100, while 1st support hits today at 71.970 and below there
at 71.670.

 

COCOA MARKET RECAP

3/10/2005

May Cocoa finished up 15 at 1753, 22 off the high
and 18 up from the low.

May cocoa closed higher Thursday, but within
Wednesday’s trading range as spread trading dominated market activity. While
cocoa was reported to be arriving at Ivory Coast ports, farmers remain
disgruntled over a lack of government financing support for bean purchases. But
despite the supply flow from the Ivory Coast, funds continue to see this market
as relatively cheap which could drive May cocoa back to test the November highs.
However, with the fund net long position at a record level as of the last COT
report with options, the market will be vulnerable to profit taking breaks.

Technical Outlook

COCOA (MAY) 03/11/2005: 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. With the close higher than the pivot swing number, the market
is in a slightly bullish posture. The next downside objective is now at 1714.
The next area of resistance is around 1773 and 1794, while 1st support hits
today at 1733 and below there at 1714.

 

COFFEE MARKET RECAP

3/10/2005

May Coffee closed up 6.35 at 138.10. This was
5.10 up from the low and 0.30 off the high.

May coffee closed 636 points higher on the
session to new contract highs and to the highest level for the nearby contract
since December 1999 when futures hit a peak of 145.00. May coffee has rallied
1665 points off of Friday’s lows led by aggressive buying all week in London.
May futures in London closed at $1063/ton as compared with a low in October at
$595/ton. Nearby futures in London hit a low of $530/ton in October. The main
coffee region in Vietnam (Dak Lak) is in drought condition and traders believe
that production could be down by near 1.2 million bags from last years estimates
of 5.83-6.33 million bags. Brazil will auction 100,000 bags of coffee on March
14th which is left over from the producer options program in 2002. Auctions were
suspended in June of 2004 after the government had sold near 1.5 million bags
which would suggest that there is near 430,000 bags of coffee left in storage
from the producer options program.

Technical Outlook

COFFEE (MAY) 03/11/2005: Rising stochastics at
overbought levels warrant some caution for bulls. The cross over and close above
the 18-day moving average is an indication the longer-term trend has turned
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. The near-term upside target is at 142.25. The market is becoming
somewhat overbought now that the RSI is over 70. The next area of resistance is
around 140.75 and 142.25, while 1st support hits today at 135.40 and below there
at 131.50.

 

SUGAR MARKET RECAP

3/10/2005

May Sugar closed down 0.03 at 8.97. This was 0.03
up from the low and 0.08 off the high.

May sugar closed slightly lower with a quiet
inside trading session. Trade house buying emerged support the London market and
to some extent New York which helped offset light speculative long liquidation
selling. There are rumors that Russia is beginning to check pricing to begin an
import campaign but there is still no confirmation that buying has begun.
Massive expansion in world consumption in being offset by prospects for another
record crop from the center-south region of Brazil. In the USDA supply/demand
report for sugar, a revision higher in usage pulled ending stocks for the
2004/2005 season down to 1.473 million tons from 1.548 million projected last
month and from 1.987 and 1.67 million the past two years.

Technical Outlook

SUGAR (MAY) 03/11/2005: Daily momentum studies
are on the rise from low levels and should accelerate a move higher on a push
through the 1st swing resistance. The close below the 18-day moving average is
an indication the longer-term trend has turned down. The market tilt is slightly
negative with the close under the pivot. The near-term upside target is at 9.09.
The next area of resistance is around 9.02 and 9.09, while 1st support hits
today at 8.92 and below there at 8.88.

 

COTTON MARKET RECAP

3/10/2005

May Cotton finished up 0.65 at 52.65, 0.55 off
the high and 1.00 up from the low.

May cotton managed to move to the highest level
since September as fund traders emerged to buy more cotton after the USDA report
failed to trigger selling. The US Supply/demand report showed some tightening
but the world report showed a significant increase in ending stocks. US exports
were revised higher by 200,000 bales which caused ending stocks to drop to 7.1
million bales from 7.3 million last month and 3.51 million bales last year.
World ending stocks for the 2004/2005 season were revised higher to 47.44
million bales, up 810,000 bales from last months forecast and up 11.78 million
bales from last year. China numbers were left unchanged. Weekly export sales
report came in at 215,900 bales as compared with trade expectations at
75,000-150,000 bales. Cumulative sales have reached 82.8% of the new USDA
forecast for the season as compared with 89% on average for this time of the
year.

Technical Outlook

COTTON (MAY) 03/11/2005: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The market now above the 18-day moving average suggests the longer-term
trend has turned up. The market setup is supportive for early gains with the
close over the 1st swing resistance. The near-term upside objective is at 54.08.
With a reading over 70, the 9-day RSI is approaching overbought levels. The next
area of resistance is around 53.42 and 54.08, while 1st support hits today at
51.88 and below there at 50.99.

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