How The FDA Can Influence The Price Of Soybeans

Technical Outlook

#BONDS (JUN) 5/26/2004: The market has a slightly
positive tilt with the close over the swing pivot. Near-term resistance for
bonds is at 105.29 and then again at 106.04, while swing support hits at 105.12
and below there at 105.02. A positive signal for trend short-term was given on a
close over the 9-bar moving average. Stochastics are at mid-range, but trending
higher which should reinforce a move higher if resistance levels are taken out.
The next upside objective is 106.04.

T-NOTES(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 109.19. It is a mildly bullish
indicator that the market closed over the pivot swing number. Near-term
resistance for the T-Notes is at 109.13 and then again at 109.19, while swing
support hits at 109.02 and below there at 108.29. The market’s short-term trend
is positive on a close above the 9-day moving average.

 

STOCK INDICES RECAP

5/25/2004

For a change the stock market reversed the
pattern of early weakness and did so without the direct help of daily US
economic stats. Certainly seeing energy prices deflate provided the stock market
with a positive lift but it is surprising that the market was able to embrace
the bull side so aggressively in the face of recent concerns. News that Mexico
would try to increase exports to 1.95 million barrels per day might be seen as a
more direct energy supply inflow to the US, and that might have caused some
energy shorts to cover positions Tuesday afternoon.

Technical Outlook

#S&P500 (JUN) 5/26/2004: There could be more
upside follow through since the market closed above the 2nd swing resistance.
The outside day up gives the market a positive tilt. The upside daily closing
price reversal gives the market a bullish tilt. Underlying support comes in at
1100.35 and 1083.33, with overhead resistance at 1124.05 and 1130.73. The close
above the 9-day moving average is a positive short-term indicator for trend.
Momentum studies are rising from mid-range which could accelerate a move higher
if resistance levels are penetrated. The near-term upside objective is at
1130.73.

S&P E-Mini (JUN): The outside day up and close
above the previous day’s high is a positive signal. The daily closing price
reversal up is positive. Positive momentum studies in the neutral zone will tend
to reinforce higher price action. The next upside target is 1130.94. The market
has a bullish tilt coming into today’s trade with the close above the 2nd swing
resistance. Near-term resistance for the S&P Mini is at 1124.38 and then again
at 1130.94, while swing support hits at 1100.63 and below there at 1083.44. The
market’s close above the 9-day moving average suggests the short-term trend
remains positive.

NASDAQ (JUN) The outside day up is somewhat
positive. The daily closing price reversal up is a positive indicator that could
support higher prices. A positive signal for trend short-term was given on a
close over the 9-bar moving average. The market has a bullish tilt coming into
today’s trade with the close above the 2nd swing resistance. The market should
run into resistance at 1468.25 and above there at 1481.88 with support at
1423.75 and 1392.88. Stochastics are at mid-range, but trending higher which
should reinforce a move higher if resistance levels are taken out. The next
upside objective is 1481.88. The market now above the 40-day moving average
suggests the longer-term trend is up.

MINI DOW (MAR) The outside day up gives the
market a positive tilt. The upside daily closing price reversal gives the market
a bullish tilt. The close above the 9-day moving average is a positive
short-term indicator for trend. The market should run into resistance at 10214
and above there at 10271 with support at 10005 and 9853. Momentum studies are
rising from mid-range which could accelerate a move higher if resistance levels
are penetrated. The near-term upside target is at 10271. There could be more
upside follow through since the market closed above the 2nd swing resistance.

 

CURRENCY MARKET RECAP

5/25/2004

The Dollar opened weak, traded even weaker and
remains in a quasi technical failure. We suspect that the economic information
released Tuesday served to undermine the Dollar, as the direct threat of higher
interest rates seems to have abated. The big gainers against the Dollar were the
Pound and the Yen with the Canadian failing to fully capitalize on Dollar slide.
The Pound looks as if it might be the near term trend setter with many assuming
that the UK economy is strong and probably a little more insulated against
soaring energy prices than the US or Euro zone.

Technical Outlook

#CURRENCIES 5/26/2004: YEN (JUN): A positive
signal for trend short-term was given on a close over the 9-bar moving average.
The market has a bullish tilt coming into today’s trade with the close above the
2nd swing resistance. Swing resistance is targeted at 89.98 and above there at
90.30, with the yen finding support around 89.02 and below there at 88.38. The
market back below the 40-day moving average suggests the longer-term trend could
be turning down. Stochastics are at mid-range, but trending higher which should
reinforce a move higher if resistance levels are taken out. The next upside
objective is 90.30.

EURO (JUN): Daily stochastics have risen into
overbought territory which will tend to support reversal action if it occurs.
The near-term upside target is at 1.2155. The defensive setup, with the close
under the 2nd swing support, could cause some early weakness. Swing support for
the Euro comes in at 1.2035, with overhead resistance at 1.2155. Stochastics are
rising from over sold levels which is bullish and should support higher prices.
More selling pressure is likely given yesterday’s gap lower price action on the
day session chart.

 

PRECIOUS METALS RECAP

5/25/2004

Gold started the session out strong, gave back
some gains and then finished the session strong. With the Dollar closing below
90.00 a number of technical systems are pointing to lower action ahead. US
economic numbers Tuesday were mixed to disappointing for the Dollar and that in
turn is supportive to gold. It was clear from the action Tuesday that all
precious metals markets were in favor. The platinum market was especially
showing strength as if the Asian trade is snapping up supply.

Technical Outlook

#P-METALS 5/26/2004: SILVER (JUL): The market has
a slightly positive tilt with the close over the swing pivot. Initial support
for silver is at 604.0 and below there at 598.5 with resistance likely at 608.4
and 613.0. A positive signal for trend short-term was given on a close over the
9-bar moving average. Stochastics are at mid-range, but trending higher which
should reinforce a move higher if resistance levels are taken out. The next
upside objective is 608.4.

GOLD (AUG): Support for gold today comes in near
386.88, while resistance is pegged at 392.28. Momentum studies are rising from
mid-range which could accelerate a move higher if resistance levels are
penetrated. The near-term upside target is at 392.28. Short-term indicators
suggest buying pullbacks today. Market positioning is positive with the close
over the 1st swing resistance. The close above the 9-day moving average is a
positive short-term indicator for trend. Follow through buying looks likely if
the market can hold yesterday’s gap on the day session chart.

 

COPPER MARKET RECAP

5/25/2004

The copper market showed early signs of strength
but then gave up the gains into the close. We are a little surprised that
favorable US equity market action and significantly weaker energy prices didn’t
give copper a boost but the market was apparently not that interested in the
macro economic condition. In order to shift the macro economic case solidly into
the bull camp, we suspect that a series of lower energy price days will be
needed. Traders must also keep a close eye on the Noranda situation, as that
could provide a surprise lift to prices over the coming sessions.

 

ENERGY MARKET RECAP

5/25/2004

The energy complex faded despite suggestions from
the Iranian Oil Minister that an increase in production from OPEC won’t result
in lower energy prices. With many OPEC members suggesting that US refinery
issues are supporting prices the argument that more OPEC oil won’t change the
world situation is a good argument. The Iranian Oil Minister also suggested that
$30 was a fair value for oil but with the basket prices at $36.40 we are not
sure what the importance of $30 is to near term action. We would have thought
that Saudi comments to only increase production if necessary would have provide
some support to the market but apparently the bull camp was unwilling to buy the
lower price action. Talk that Mexico would try to increase exports to 1.95
million barrels per day might be seen as a more direct inflow to the US, hence
the sustained selling pressure during the session.

Technical Outlook

#ENERGIES 5/26/2004: CRUDE OIL (JUL): It is a
slightly negative indicator that the close was under the swing pivot. Support
for crude is keyed on 40.62 and below there at 40.17, with resistance pegged at
41.66 and 42.25. The close above the 9-day moving average is a positive
short-term indicator for trend. Momentum studies trending lower from overbought
levels is a bearish indicator and would tend to reinforce lower price action.
The next downside target is now at 40.17.

UNLEADED GAS (JUL): Stochastics turning bearish
at overbought levels will tend to support lower prices if support levels are
broken. The next downside objective is 129.71. The close below the 1st swing
support could weigh on the market. Resistance today is at 138.31, while support
should be found around 129.71. A negative signal for trend short-term was given
on a close under the 9-bar moving average. Bearish daily studies indicate
selling minor rallies this session.

HEATING OIL (JUL): It is a slightly negative
indicator that the close was under the swing pivot. Heating oil should encounter
support around 100.60, with resistance is at 105.70. The close below the 9-day
moving average is a negative short-term indicator for trend. Momentum studies
trending lower from overbought levels is a bearish indicator and would tend to
reinforce lower price action. The next downside target is now at 100.60.

 

CORN MARKET RECAP

5/25/2004

A lack of producer selling and increased interest
for continued strong US exports along with weather helped push July corn to a
12-sesswion high. Forecasts for more rain across the mid-west for much of the
next week or two has helped turn the psychology in the market over to the bull
camp. Speculators are fearful of missing a weather move and speculative buying
appears to be active again today which is adding to the positive tone. With more
heavy rains anticipated over the next week or so, replanting and planting delays
could become a larger issue. The weekly crop progress report showed that 95% of
the crop has been planted. In other word, there are still at least 4 million
acres which are not planted which does not include areas which need to be
replanted due to excessive rain and the “extra” acres which producers intend to
plant above the March USDA intensions report. The recent break in the flat price
along with a sharp downward correction in international freight rates is thought
to have increased interest from importers of US corn. December corn support
moves up to 294 1/2 and 291 3/4 with 300 1/2 and 305 1/2 as resistance.

Technical Outlook

#CORN (JUL) 5/26/2004: Stochastics are rising
from over sold levels which is bullish and should support higher prices. The
near-term upside target is at 307 3/4. There could be more upside follow through
since the market closed above the 2nd swing resistance. Market resistance comes
in at 307 3/4 today, with support at 298 3/4. The close above the 9-day moving
average is a positive short-term indicator for trend. Follow through buying
looks likely if the market can hold yesterday’s gap on the day session chart.

 

SOY COMPLEX RECAP

5/25/2004

Concerns that the wet weather pattern in the
Midwest will continue for the next few weeks to cause damage and delay plantings
or re-plantings helped to support the early strong gains. In addition, another
round of active speculative buyers entered the meal market on continued
expectations that the FDA will soon tighten rules for livestock feeding. An
agency official indicated that they are considering banning risk materials from
cattle (brain, spinal material and other parts) for feeding to US poultry and
hogs. Traders continue to believe that once the new regulations go into effect
that meal usage will have a tendency to increase. Apparently, the new rules are
expected to be announced in late June. More excessive rainfall overnight and
concerns that the central and southern cornbelt get hit into early next week
with more rain on saturated soils raised concerns for the crop. Strength in the
China market overnight and talk that the old crop futures may have already
absorbed the worst of the demand problems from China helped to support the old
crop futures recovery as well. Weakness in the palm oil overnight helped to drag
the oil market lower over the past few days but the premium of soybean oil to
palm has narrowed recently which might support better soybean oil world demand.
South Korea is tendering for 25,000 tons of US non-GMO food-grade soybeans.
Short-term support for July soybeans comes in at 880 and 874 with resistance at
889 1/2 and 922 1/2. November soybean support comes in at 707 and 703 with 720
3/4 and 733 3/4.

Technical Outlook

#SOYBEANS (JUL) 05/26/04 The market setup is
supportive for early gains with the close over the 1st swing resistance. The
next area of resistance is around 893 2/4 and 906 1/4, while 1st support hits
today at 870 2/4 and below there at 860 1/4. A negative signal for trend
short-term was given on a close under the 9-bar moving average. Daily
stochastics declining into oversold territory suggest the selling may be drying
up soon. The next downside objective is 860 1/4.

MEAL (JUL): Momentum studies are still bearish,
but are now at oversold levels and will tend to support reversal action if it
occurs. The next downside target is now at 278.5. First resistance comes in at
291.0, with support at 283.0. The close below the 9-day moving average is a
negative short-term indicator for trend. Market positioning is positive with the
close over the 1st swing resistance.

BEAN OIL (JUL): A negative signal for trend
short-term was given on a close under the 9-bar moving average. Daily
stochastics declining into oversold territory suggest the selling may be drying
up soon. The next downside objective is 28.25. A positive setup occurred with
the close over the 1st swing resistance. Daily swing resistance is found at
28.99 and above there at 29.25. Support should be encountered at 28.49 and
28.25.

 

WHEAT MARKET RECAP

5/25/2004

The lower close suggests that the market may need
more evidence of some type of problem for the mid-west winter wheat crop before
jumping to conclusions that the rain in the forecast “might” cause disease
problems ahead. A lack of export news and fears of the harvest season selling
pressures ahead may have also slowed the recent uptrend. US weather helped
support the higher opening but the market lacked follow-through buying support
after the higher opening. The move to the highest level since May 11th occurred
on the opening before the market quickly gave back the session’s gains and more.
The western sections of the winter wheat belt remain too dry and stressful
conditions persist. In western Kansas, there has been about 1/2 inch of less of
rain this month with highs in the 90’s again yesterday. Talk of several more
rain events into the key soft red winter wheat areas in the next two weeks added
to the bullish weather ideas for the winter wheat crop. However, international
weather conditions for key producing areas looks favorable. Moistures is seen as
favorable for the developing crops of Europe and eastern Europe, rains in
Australia will help some of the driest areas get the new crop planted on time
and China growing regions also see rain in the forecast this week. A lack of
export developments added to the negative tone and helped trigger additional
long liquidation or profit-taking selling from speculators. July wheat
short-term resistance points come in at 282 1/4 and 286 1/2 with 372 3/4 and
then 369 3/4 as support.

Technical Outlook

#WHEAT (JUL) 5/26/2004: The market could take on
a defensive posture with the daily closing price reversal down. The market has a
slightly positive tilt with the close over the swing pivot. Expect near-term
support around 374 and below there at 369 3/4, with resistance levels at 382 2/4
and 386 3/4. A positive signal for trend short-term was given on a close over
the 9-bar moving average. Stochastics are at mid-range, but trending higher
which should reinforce a move higher if resistance levels are taken out. The
next upside objective is 386 3/4.

 

LIVE CATTLE RECAP

5/25/2004

The cattle market came under heavy selling
pressure into the middle of the session with August down as much as 215 points
at one point as speculative long liquidation was active. Talk of lower cash
markets and increasing uncertainty over mad cow helped to trigger the selling.
There were rumors on the floor that a patient at the Mayo clinic was being
tested for mad cow was seen as one of the factors which contributed to the early
selling. The rumor was found to be a false scare as the patient, a US soldier,
apparently caught the disease (reported 7-months ago) by eating sheep’s brain in
Oman. Traders are also suspicious over the USDA announcement that the Food and
Safety Inspection Service has completed their review as to why a condemned cow
in Texas which had mad cow symptoms was not tested but the results of the review
are not being made public. Cash cattle traded two dollars lower which added to
the weakness.

Technical Outlook

#CATTLE (AUG) 5/26/2004: A bearish signal was
triggered on a crossover down in the daily stochastics. The next downside
objective is 83.37. The close below the 1st swing support could weigh on the
market. Support should be encountered at 84.42 and below there at 83.37. Market
resistance is at 86.47 and then again at 87.45. A positive signal for trend
short-term was given on a close over the 9-bar moving average.

 

LEAN HOGS RECAP

5/25/2004

July hogs pushed moderately lower on the session
as weakness in cash and product prices helped to pressure. With pork cut-out
values down for the 5th session in a row on Monday, a sharp break in cattle,
bellies and further weakness in the cash market, the selling pressured increased
into mid-session. The persistent recent downtrend in pork values ate into packer
profit margins and added to the bearish tone. Cash hogs were also lower and the
2-day lean index for the period ending May 21st came in at 82.70, down 65 cents.
Concerns with deliveries for May bellies and ideas that export demand has
softened added to the tendency toward long liquidation from speculators. In
addition, the lower trending pork values this week could be eating into packer
profit margins which might add to the weaker tone for cash live hogs this week.
For the weekly cold storage report, released after the close, traders are
looking for an out-movement of 250,000-500,000 pounds.

Technical Outlook

#HOGS (JUL) 5/26/2004: The defensive setup, with
the close under the 2nd swing support, could cause some early weakness.
Resistance levels comes in at 74.30 and 75.30 today, while support is around
72.90 and then 72.50. The close below the 9-day moving average is a negative
short-term indicator for trend. Stochastics trending lower at midrange will tend
to reinforce a move lower especially if support levels are taken out. The next
downside target is now at 72.50.

 

COCOA MARKET RECAP

5/25/2004

The cocoa market showed an upside breakout
capacity with a higher trade and strong close on Tuesday. The funds noted that
the July contract closed above a critical moving average level on the charts
which many take as a sign that more fund short covering might be ahead. Reports
that the “trade” was buying cocoa Tuesday, means that the professional players
are seeing the political threat and are moving to extend forward coverage as a
result of that threat. A persistently weaker Dollar is also providing an upward
thrust for cocoa, which is once again beginning to find favor versus the London
market.

Technical Outlook

COCOA (JUL) 05/26/04 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 1409 and above there at 1417 with support at
1383 and 1365. Positive momentum studies in the neutral zone will tend to
reinforce higher price action. The next upside target is 1416.50.

 

COFFEE MARKET RECAP

5/25/2004

September coffee surged higher to close at the
highest level since March 23rd as speculative buyers overwhelmed the pit after
the lower opening. Continued fears of frost into the Brazil harvest period ahead
has helped support the market with cold weather expected for Thursday in Brazil.
Private forecasters continue to predict cold, but not frosty, temperatures for
this week and another cold front for next week. Even though there is no frost in
the forecast, the pattern of below normal temperatures into early June seems to
be enough to trigger speculative buying and a lack of commercial selling.

Technical Outlook

COFFEE (JUN) 5/26/04 The market has a slightly
positive tilt with the close over the swing pivot. The 9-day RSI over 70
indicates the market is approaching overbought levels. Studies are showing
positive momentum, but are now in overbought territory so some caution is
warranted. The near-term upside objective is at 79.20. The Coffee contract
should run into resistance at 78.65 and above there at 79.20 with support at
76.9 and 75.70. The market’s short-term trend is positive on a close above the
9-day moving average.

 

SUGAR MARKET RECAP

5/25/2004

After a lower opening and choppy early trade due
to the overnight weakness in London, the market found increasing buying from
funds and speculators to push the market to a new 12-session high. The market
continues to find support from increased interest from end users. The trade
remains concerned with increased harvest of the bumper crop in Brazil but there
are still scattered rains in the forecast for the next few days before dry and
more favorable harvest weather for the weekend. The technical action continues
to turn more bullish.

Technical Outlook

#SUGAR (JUL) 5/26/2004: There could be more
upside follow through since the market closed above the 2nd swing resistance.
Swing resistance comes in at 6.88, with support found at 6.54. The close above
the 9-day moving average is a positive short-term indicator for trend. The cross
over and close above the 40-day moving average is an indication the longer-term
trend is up. Momentum studies are rising from mid-range which could accelerate a
move higher if resistance levels are penetrated. The near-term upside target is
at 6.88.

 

COTTON MARKET RECAP

5/25/2004

The cotton market inched higher in quiet trade
finding support from higher grain prices and hopes that this week’s shipment
pace (reported for Thursday morning) will show an active pace due to recently
implemented step 2 payments. The lack of a weather premium has clashed with good
planting progress and a weak demand tone from China in the past few weeks as
China officials attempt to slow economic growth through tighter credit. The lack
of decertifications in the past two sessions has added to the bearish tone as
traders were hopeful that stocks would fall significantly. The Cotlook A Index
was up 25 cents to 69.45.

Technical Outlook

#COTTON (JUL) 5/26/2004: A negative signal for
trend short-term was given on a close under the 9-bar moving average. The market
has a slightly positive tilt with the close over the swing pivot. Next
resistance area comes in at 64.23 and then again at 64.67, while support is
targeted at 63.13 and 62.47. Momentum studies trending lower at mid-range could
accelerate a price break if support levels are broken. The next downside
objective is 62.47.