It’s Not Just Hurricane Ivan That’s Lifting Energy Prices

The early break drove the market into new
contract lows but the selling slowed into mid-session. Funds were noted sellers
of near 3000 contracts into the mid-session. Warm and mostly dry weather for the
mid-west this week is seen as a bearish factor as crops in the north seem to
have a little more time to push toward maturity and harvest in the southern
cornbelt could get more active this week. Weekly export inspections came in at
22.97 million bushels as compared with trade expectations for 30-35 million
bushels and 40.62 million bushels necessary each week to reach the USDA
projection. Talk of higher than expected yields in the southern Midwest
continues to pressure the market as well and the technical break-out to the
downside has added to the technical selling. Traders expect a slight
deterioration in crop conditions for tonight’s weekly crop progress report (69%
good to excellent last week) but this is a seasonal trend. Traders will focus on
the state reports from the northern cornbelt for the report impact. Midwest cash
basis levels were weak with commercial traders anticipating harvest pressures
ahead. December corn resistance comes in at 224 and 225 with 218 3/4 and 217 1/4
as next support.

Technical Outlook

CORN (DEC) 09/14/2004: The market was pushed to a
new contract low. 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. The close below the 1st swing support could weigh on the
market. The next downside target is now at 217 3/4. The next area of resistance
is around 221 3/4 and 222 3/4, while 1st support hits today at 219 1/4 and below
there at 217 3/4.

 

SOY COMPLEX RECAP

9/13/2004

November Soybeans finished down 1 at 571, 1 1/4
off the high and 7 1/2 up from the low. January Soybeans closed down 1 1/2 at
579. This was 8 up from the low and 1 off the high.

December Soymeal closed unchanged at 167.8. This
was 2.3 up from the low and 0.7 off the high.

December Soybean Oil finished down 0.21 at 23.15,
0.12 off the high and 0.09 up from the low.

Good weather in the forecast for the northern
cornbelt to help push the crop toward maturity and an excellent forecast to see
more active harvest this week helped to trigger the selling in soybeans and the
products in the morning session. The selling slowed on stronger than expected
export shipments and continued talk of improved short-term demand from China.
Talk of higher than expected yields continues to flow on the floor and has added
to the bearish tone in spite of the USDA forecast on Friday for lower yields.
More concerns about the spread of bird flu added to the bearish tone for the
meal market. The USDA lowered their forecast for meal exports for the 2004/2005
season on Friday to 4.95 million tons from 5.2 million tons as last months
forecast. The problem with getting too exited about lower oil yields for the
bulls is the enormous world supply of oilseeds for the coming year. World
oilseed ending stocks at the end of the 2004/2005 season are expected to reach
56.87 million tons, up nearly 2 million tons from last months forecast and up
from 41.85 million tons this season and 44.25 million tons last season. Weekly
export inspections came in at 10.554 million bushels as compared with trade
expectations for 1-4 million bushels and 19.4 million bushels necessary each
week to reach the USDA projection. For the NOPA crush report, released before
the opening, traders are looking for August crush to come in near 98-103.5
million bushels as compared with 108.7 million bushels in July and 121.2 million
bushels in August of 2003. November soybean resistance comes in at 577 1/2 and
592 (40-day MA) with next support at 566 and 552.

Technical Outlook

BEANS (NOV) 09/14/2004: The downside crossover (9
below 18) of the moving averages suggests a developing short-term downtrend.
Daily stochastics declining into oversold territory suggest the selling may be
drying up soon. 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 next
downside objective is 560 3/4. The next area of resistance is around 575 1/4 and
578, while 1st support hits today at 566 3/4 and below there at 560 3/4.

MEAL (DEC) 09/14/2004: Momentum studies are
declining, but have fallen to oversold levels. 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. The next downside
objective is now at 164.4. The next area of resistance is around 169.3 and
170.4, while 1st support hits today at 166.3 and below there at 164.4.

BEANOIL (DEC) 09/14/2004: Stochastics trending
lower at midrange will tend to reinforce a move lower especially if support
levels are taken out. A negative signal for trend short-term was given on a
close under the 9-bar moving average. The market tilt is slightly negative with
the close under the pivot. The next downside target is 22.95. The next area of
resistance is around 23.25 and 23.36, while 1st support hits today at 23.05 and
below there at 22.95.

 

WHEAT MARKET RECAP

9/13/2004

December Wheat finished up 2 3/4 at 336 1/4, 3 1/4 off the
high and 7 1/4 up from the low. March Wheat closed up 3 1/2 at 346 3/4. This was
7 3/4 up from the low and 2 1/4 off the high.

Weakness in the other grains and ideas that the
rally on Friday may have been too far too fast helped trigger some light
speculative selling. In addition, the market is slightly concerned that a rally
in futures could leave US wheat less competitive on the world market. However,
fears of Canadian crop damage or at least a larger percentage of “feedwheat”
quality this season helped to support the rally into the mid-session and a cool
and wet forecast for the Canadian wheat areas today would indicate that the crop
is still vulnerable to more quality and maybe yield damage ahead. While the
region stays cool, there could be a few dry days in the middle of the week but
there is more rain in the forecast for the region into the weekend. Egypt
cancelled a snap tender from Friday afternoon on Saturday with indications that
prices were not suitable as the reason for the cancellation. Weekly export
inspections came in at 22.477 million bushels as compared with trade
expectations for 30-35 million bushels and 16.87 million bushels necessary each
week to reach the USDA projection. Cumulative shipments have reached 32.8% of
the USDA forecast for the year as compared with 29.8% as the 5-year average for
this point in the marketing year. There were no deliveries against the September
contract. The Commitment-of-Traders report with options showed the market in a
bearish set-up (funds short and small specs net long) but the net short position
of the large trader has reached nearly 24,000 contracts which is close to record
highs and this leaves the market vulnerable to short-covering if resistance
levels are violated. Support for December wheat comes in at 331 and 327 1/2 with
347 1/4 and 359 as key resistance points.

Technical Outlook

WHEAT (DEC) 09/14/2004: Rising stochastics at
overbought levels warrant some caution for bulls. A positive signal for trend
short-term was given on a close over the 9-bar moving average. With the close
higher than the pivot swing number, the market is in a slightly bullish posture.
The next upside objective is 345 3/4. The next area of resistance is around 341
1/2 and 345 3/4, while 1st support hits today at 331 and below there at 324 3/4.

 

LIVE CATTLE RECAP

9/13/2004

October Live Cattle closed unchanged at 85.02.
This was 0.12 up from the low and 0.55 off the high.

October Feeder Cattle finished up 1.32 at 111.65,
0.25 off the high and 1.05 up from the low.

October cattle closed unchanged on the session
and down 55 points from the highs of the day as the early rally was met with
long liquidation selling. Expectations of firm cash trade this week along with
follow-through technical buying from Friday’s solid gains helped to support the
early gains. However, news of the 12th mad cow case reported in Japan put a
damper on hopes of a quick resolution to the Japanese ban on US beef and may
also trigger some shift away from beef from Japanese consumers. Boxed-beef
cutout values (600-750 choice) were up $1.00 on the day at mid-session to
$130.91 as compared with $131.05 last week at this time. Slaughter for the day
came in at 128,000 head as compared with trade expectations at 120,000-129,000
head.

Technical Outlook

CATTLE (OCT) 09/14/2004: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The close above the 9-day moving average is a
positive short-term indicator for trend. It is a slightly negative indicator
that the close was lower than the pivot swing number. The near-term upside
objective is at 85.800. The next area of resistance is around 85.350 and 85.800,
while 1st support hits today at 84.700 and below there at 84.470.

 

LEAN HOGS RECAP

9/13/2004

October Lean Hogs closed up 1.02 at 67.07. This
was 0.67 up from the low and 0.22 off the high.

February Pork Bellies finished down 0.17 at
93.52, 0.72 off the high and 0.37 up from the low.

October hogs closed 102 higher on the session and
to the highest close since August 13th as a positive tone for cash markets, the
discount of futures to cash and hopes of continued strong US pork exports helped
to support the market. A new case of mad cow in Japan along with the jump in
loins on Friday helped support ideas that export markets will remain strong. The
CME 2-Day Lean index for the period ending September 9th was down just 21 cents
to 71.77 which is down just 66 cents since the end of August. The steep discount
of futures to cash and the slow pace of decline in the cash market is providing
support to the futures market as the spread narrows. Slaughter came in at
400,000 head as compared with trade expectations at 395,000-400,000. The higher
than expected slaughter is a sign of good demand

Technical Outlook

HOGS (OCT) 09/14/2004: The cross over and close
above the 40-day moving average indicates the longer-term trend has turned up.
Studies are showing positive momentum but are now in overbought territory, so
some caution is warranted. 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 next upside
target is 67.850. The next area of resistance is around 67.520 and 67.850, while
1st support hits today at 66.650 and below there at 66.070.

 

COCOA MARKET RECAP

9/13/2004

December Cocoa finished down 1 at 1456, 18 off
the high and 14 up from the low.

After a probe into new low ground for the move,
the cocoa market managed to climb back above critical support. With weather
services reporting favorable weather for the African cocoa crop for the first
ten days of September, the speculative bug is undermined and with the market
reaching the lowest level since early July we can understand the ongoing
technical pressure on prices from the charts. While there is some political
tension in Nigeria there would not seem to be a distinct threat against supply
to countervail the recent down draft in prices.

Technical Outlook

COCOA (DEC) 09/14/2004: Momentum studies are
declining, but have fallen to oversold levels. The market’s short-term trend is
negative as the close remains below the 9-day moving average. The market’s close
below the pivot swing number is a mildly negative setup. The next downside
objective is now at 1425. Some caution in pressing the downside is warranted
with the RSI under 30. The next area of resistance is around 1472 and 1489,
while 1st support hits today at 1440 and below there at 1425.

 

COFFEE MARKET RECAP

9/13/2004

December Coffee closed up 3.15 at 77.35. This was
3.60 up from the low and 0.25 off the high.

A massive range up trade seemed to be inspired by
the hurricane threat, as funds apparently wanted to place bets the potential
destruction of stocks in New Orleans warehouses. With the track of the storm
potentially headed for New Orleans and the storm surge possibly reaching 20 feet
it isn’t irrational to think that warehouse supplies could be at risk. It is
also supportive that US coffee roastings managed to exceed year ago levels and
that Mexican August coffee exports declined by 25%. In other words, coffee saw
the potential for tighter supply and anecdotal evidence of real tightening of
supply. By the opening Tuesday morning the coffee market will probably have its
answer to the hurricane issue.

Technical Outlook

COFFEE (DEC) 09/14/2004: Momentum studies are
trending higher but have entered overbought levels. The market’s short-term
trend is positive on the close above the 9-day moving average. 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 upside
target is 80.35. The next area of resistance is around 79.25 and 80.35, while
1st support hits today at 75.45 and below there at 72.70.

 

SUGAR MARKET RECAP

9/13/2004

October Sugar closed down 0.15 at 7.66. This was
0.04 up from the low and 0.17 off the high.

The sugar market seems to be losing the
aggressive upside momentum seen into the early August high. While the sugar
market has managed to recover from the August lows the market seems to be
lacking an ongoing bullish theme capable of rekindling aggressive buying. It
also seems like small spec longs are exiting positions rather than sustaining
those positions and that is a change of pace from the last 6 months. However,
the trade is being supported by ongoing hopes for decent demand expectations
from India going forward.

Technical Outlook

SUGAR (MAR) 09/14/2004: A crossover down in the
daily stochastics is a bearish signal. Momentum studies trending lower from
overbought levels is a bearish indicator and would tend to reinforce lower price
action. A negative signal for trend short-term was given on a close under the
9-bar moving average. The daily closing price reversal down is a negative
indicator for prices. The market’s close below the pivot swing number is a
mildly negative setup. The next downside target is now at 8.44. The next area of
resistance is around 8.66 and 8.77, while 1st support hits today at 8.50 and
below there at 8.44.

 

COTTON MARKET RECAP

9/13/2004

October Cotton finished up 1.80 at 53.05, equal
to the high and 1.55 up from the low.

The cotton market surprisingly didn’t respond as
aggressively as one would have expected considering the expected track of the
storm. With the cotton crop exposed to significant damage in the event of a
westerly track in the storm the cotton market could eventually see a night and
day situation following the decisively negative USDA cotton report last Friday.
In other words, supply is expected to totally weigh on cotton prices if the crop
is left in its current condition through harvest. Some traders suggest that
about 2/3rds of the cotton crop is open and under threat with harvest 1-2 months
off in the future.

Technical Outlook

COTTON (DEC) 09/14/2004: Momentum studies
trending lower at mid-range should accelerate a move lower 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. A positive setup occurred with the close
over the 1st swing resistance. The next downside objective is now at 50.51. The
next area of resistance is around 53.18 and 53.67, while 1st support hits today
at 51.60 and below there at 50.51.