Key USDA Reports Tomorrow–Here’s What Corn Speculators Are Doing
BOND MARKET RECAP
10/11/2004
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Market closed due to Holiday.
Technical Outlook
BONDS (DEC) 10/12/2004: The major trend could be
turning up with the close back above the 40-day moving average. Daily
stochastics are trending lower but have declined into oversold territory. The
close above the 9-day moving average is a positive short-term indicator for
trend. The market has a bullish tilt coming into today’s trade with the close
above the 2nd swing resistance. The next downside objective is now at 110-06.
The next area of resistance is around 112-31 and 113-15, while 1st support hits
today at 111-11 and below there at 110-06.
TNOTES (DEC) 10/12/2004: The market now above the
40-day moving average suggests the longer-term trend has turned up. Momentum
studies are declining, but have fallen to oversold levels. The market’s close
above the 9-day moving average suggests the short-term trend remains positive.
The market has a bullish tilt coming into today’s trade with the close above the
2nd swing resistance. The next downside objective is 111-160. The next area of
resistance is around 113-015 and 113-115, while 1st support hits today at
112-040 and below there at 111-160.
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STOCK INDICES RECAP
10/11/2004
December S&P finished up 4.1 at 1126.2, 0.6 off
the high and 3.1 up from the low.
December S&P E-Mini closed up 4 at 1126. This was
4 up from the low and 1 off the high.
December Dow closed up 47 at 10086. This was 45
up from the low and 7 off the high.
December Dow E-Mini finished up 47 at 10086, 8
off the high and 45 up from the low.
The stock market continues to perform
impressively despite all that is going on around. With another new all time high
in energy prices early in the session one would have expected stock prices to
weaken but instead the market held in positive ground for most of the session.
Chemical companies showed some favorable earnings expectations and therefore the
market seems to be supporting itself off the earnings expectation. However, the
market will have to find its own information until Wednesday when the US
economic report slate will return to an active status. However, in the mean time
the market will remain vulnerable to soaring energy prices. Talk about terrorist
possibly monitoring the Washington State Ferry system could spark some long
liquidation if those stories prove valid.
Technical Outlook
S&P 500 (DEC) 10/12/2004: 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. The close over the pivot swing is a
somewhat positive setup. The next downside objective is 1121.88. The next area
of resistance is around 1128.05 and 1129.27, while 1st support hits today at
1124.35 and below there at 1121.88.
SP EMINI (DEC) 10/12/2004: Negative momentum
studies in the neutral zone will tend to reinforce lower price action. The close
below the 9-day moving average is a negative short-term indicator for trend.
With the close higher than the pivot swing number, the market is in a slightly
bullish posture. The next downside target is now at 1120.25. The next area of
resistance is around 1128.50 and 1130.25, while 1st support hits today at
1123.50 and below there at 1120.25.
NASDAQ (DEC) 10/12/2004: 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 market’s
short-term trend is negative as the close remains below the 9-day moving
average. It is a mildly bullish indicator that the market closed over the pivot
swing number. The next downside objective is 1430.50. The next area of
resistance is around 1448.00 and 1452.50, while 1st support hits today at
1437.00 and below there at 1430.50.
MINIDOW (DEC) 10/12/2004: The moving average
crossover up (9 above 18) indicates a possible developing short-term uptrend.
Stochastics trending lower at midrange will tend to reinforce a move lower
especially if support levels are taken out. The market’s close below the 9-day
moving average is an indication the short-term trend remains negative. The close
over the pivot swing is a somewhat positive setup. The next downside objective
is 10024. The next area of resistance is around 10112 and 10129, while 1st
support hits today at 10060 and below there at 10024.
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CURRENCY MARKET RECAP
10/11/2004
December US Dollar finished up 12 at 8767, 5 off
the high and 12 up from the low.
December Euro finished up 1.24 at 124.13, 0.17
off the high and 1.33 up from the low.
December Euro Dollar closed up 0.045 at 97.715.
This was 0.045 up from the low and 0.005 off the high.
December Canadian Dollar closed up 0.55 at 79.84.
This was 0.37 up from the low and 0.1 off the high.
December British Pound finished up 1.33 at
178.66, 0.17 off the high and 1.13 up from the low.
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December Japanese Yen closed up 1.42 at 91.67.
This was 1.02 up from the low and 0.15 off the high.
Pit trade closed due to holiday!
Technical Outlook
YEN (DEC) 10/12/2004: The cross over and close
above the 40-day moving average indicates the longer-term trend has turned up. A
bullish signal was given with an upside crossover of the daily stochastics.
Momentum studies are rising from mid-range, which could accelerate a move higher
if resistance levels are penetrated. The close above the 9-day moving average is
a positive short-term indicator for trend. The gap upmove on the day session
chart is a bullish indicator for trend. The market has a bullish tilt coming
into today’s trade with the close above the 2nd swing resistance. The next
upside target is 92.62. The next area of resistance is around 92.25 and 92.62,
while 1st support hits today at 91.09 and below there at 90.29.
EURO (DEC) 10/12/2004: Momentum studies trending
lower at mid-range should accelerate a move lower if support levels are taken
out. A positive signal for trend short-term was given on a close over the 9-bar
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 downside objective is now at 122.34. The next area of
resistance is around 124.88 and 125.34, while 1st support hits today at 123.38
and below there at 122.34.
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PRECIOUS METALS RECAP
10/11/2004
December Gold closed down 1.1 at 423.4. This was
0.9 up from the low and 1.1 off the high.
December Silver finished down 0.043 at 7.252,
0.068 off the high and 0.062 up from the low.
October Platinum closed up 6 at 849. This was
equal to the low and equal to the high.
The gold and silver market showed some weak
action in the face of a partial holiday in the currency markets. We also think
that the inability to hold early record prices in the energy complex undermined
gold and in turn fostered profit taking in silver. Some traders specifically
pointed to the overbought COT reports as a reason behind the profit taking but
we think the holiday trade caused more of the weakness than anything. The
television press attempted to foster the idea that funds were moving into the
metals or that physical buying was set to rise and that provided the market with
an underpin. Surprisingly platinum prices showed the most weakness early but
then managed to close higher even in the face of a weaker gold and silver close.
Technical Outlook
SILVER (DEC) 10/12/2004: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The close above the 9-day moving average is a positive short-term
indicator for trend. The market tilt is slightly negative with the close under
the pivot. The near-term upside objective is at 738.4. With a reading over 70,
the 9-day RSI is approaching overbought levels. The next area of resistance is
around 731.7 and 738.4, while 1st support hits today at 718.8 and below there at
712.4.
GOLD (DEC) 10/12/2004: 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. It is a slightly
negative indicator that the close was under the swing pivot. The next upside
target is 425.4. The next area of resistance is around 424.4 and 425.4, while
1st support hits today at 422.4 and below there at 421.5.
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COPPER MARKET RECAP
10/11/2004
December Copper finished down 0.10 at 146.85,
0.85 off the high and 0.75 up from the low.
The copper market held steady for most of the
session but failed to take out the high posted last Friday. The London market
was under long liquidation pressure and some report of hedge selling and that
could foster additional declines later this week. We haven’t noticed much in the
way of hedge or producer selling and with that action noted Monday that could
give the bears a minor edge. Phelps Dodge talked about expanding production in
Peru but that is a long term story that hardly drives prices in the near term.
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ENERGY MARKET RECAP
10/11/2004
December Crude Oil closed up 0.40 at 53.34. This
was 0.69 up from the low and 0.11 off the high.
December Heating Oil closed up 1.58 at 147.60.
This was 2.10 up from the low and 0.50 off the high.
December Unleaded Gas finished down 0.14 at
140.30, 0.60 off the high and 1.00 up from the low.
December Natural Gas finished down 0.11 at 8.16,
0.08 off the high and 0.08 up from the low.
December Propane closed up 0.02 at 0.91. This was
equal to the low and 0.01 off the high.
The crude oil market forged yet another new high
but then prices slide back into negative ground into the close. The Kuwait Oil
Minister called for a production ceiling increase, the Saudi Oil Minister
indicated that OPEC would meet the worlds oil needs and lastly the Norway Oil
Minister predicted that energy prices would fall in 2005. However, the market
takes the bearish talk with a grain of salt as uncertainties are still running
rampant in Nigeria, the US Gulf and in Iraq. In a positive note the trade noted
that a private forecast from Petrologistics put Saudi September oil production
at a lower level than was initially forecast. Seeing Gulf oil producers promised
to invest in programs to expand production could eventually dampen the bull case
but would seem to do nothing in the near term to alter the supply concern.
Technical Outlook
CRUDE OIL (DEC) 10/12/2004: The market rallied to
a new contract high. 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. It is a mildly bullish indicator that the market
closed over the pivot swing number. The next upside target is 53.99. With a
reading over 70, the 9-day RSI is approaching overbought levels. The next area
of resistance is around 53.74 and 53.99, while 1st support hits today at 52.94
and below there at 52.40.
UNLEADED (DEC) 10/12/2004: The market made a new
contract high on the rally. 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. It is a mildly bullish indicator that the
market closed over the pivot swing number. The near-term upside objective is at
141.80. The market is approaching overbought levels with an RSI over 70. The
next area of resistance is around 141.10 and 141.80, while 1st support hits
today at 139.50 and below there at 138.60.
HEATING OIL (DEC) 10/12/2004: The market rallied
to a new contract high. Rising stochastics at overbought levels warrant some
caution for bulls. The market’s short-term trend is positive on the close above
the 9-day moving average. The market has a slightly positive tilt with the close
over the swing pivot. The next upside objective is 149.80. The market is
approaching overbought levels with an RSI over 70. The next area of resistance
is around 148.89 and 149.80, while 1st support hits today at 146.30 and below
there at 144.60.
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CORN MARKET RECAP
10/11/2004
December Corn finished up 1/4 at 204 3/4, 1
1/2 off the high and 1/2 up from the low. March Corn closed unchanged at 215
1/4. This was 3/4 up from the low and 1 1/2 off the high.
The market continues to consolidate ahead of the
key USDA reports which will be released before the opening tomorrow morning.
Unlike the soybean market, corn drifted lower as speculators seem comfortable
going into the report net short and there was a lack of speculative
short-covering and some light producer selling noted for the active harvest
weekend which helped to pressure. There was light short-covering noted on the
floor early but no follow-through. Traders believe that the weekly crop progress
report, released tomorrow afternoon, will show harvest near 35% complete as
compared with 23% the previous week. The average trade estimate for the October
1st Crop Production report for Tuesday morning came in at a record high 11.217
billion bushels (range 11.059-11.375) as compared with the USDA September
estimate of 10.961 billion bushels. The average trade estimate for ending stocks
came in at 1.468 billion bushels (range 1.310-1.623) as compared with the
September estimate of 1.209 billion bushels. Taiwan is tendering to buy 56,000
tons of US corn. Support for December corn comes in at 204 and 202 1/2 with 206
and 209 1/2 as resistance.
Technical Outlook
CORN (DEC) 10/12/2004: Rising from oversold
levels, daily momentum studies would support higher prices, especially on a
close above resistance. The market’s short-term trend is negative as the close
remains below the 9-day moving average. The market tilt is slightly negative
with the close under the pivot. The near-term upside target is at 207. The next
area of resistance is around 205 3/4 and 207, while 1st support hits today at
203 3/4 and below there at 203.
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SOY COMPLEX RECAP
10/11/2004
November Soybeans finished up 10 1/2 at 539, 1
1/2 off the high and 10 up from the low. January Soybeans closed up 9 1/2 at 547
3/4. This was 10 1/4 up from the low and 3/4 off the high.
December Soymeal closed up 3.4 at 163.3. This was
3.5 up from the low and 0.2 off the high.
December Soybean Oil finished up 0.34 at 20.95,
0.07 off the high and 0.45 up from the low.
The market found solid support from speculative
short-covering ahead of the USDA Crop Production and Supply/Demand report
released at 7:30 CST on Tuesday morning. News that Brazil crop areas are only 1%
planted from 3% last year due to dry weather in some areas helped to provide
some support. The weekend Commitment-of-Traders report with options showed that
speculators built a new all-time record high in the net short position at over
51,000 contracts as of October 5th. This leaves the market vulnerable to
significant short-covering if resistance levels are violated. The average trade
estimate for October 1st soybean production is at 3.026 billion bushels (range
2.941-3.21) as compared with the September USDA estimate of 2.836 billion
bushels. The average trade estimate for ending stocks is at 342 million bushels
(range 205-450) as compared with the September estimate of 190 million bushels.
Traders look for Tuesday afternoon’s weekly crop progress report to show the
crop near 50-55% harvested, up from 36% last week. Iran is tendering to buy
20,000 tons of oil from Brazil. Other news was lacking and the move over last
week’s highs at 533 1/2 for November soybeans sparked further short-covering
ahead of the report. Support for November soybeans comes in at 530 1/2 and 527
3/4 with 539 1/2 and 545 as resistance.
Technical Outlook
BEANS (NOV) 10/12/2004: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. A positive signal for trend short-term was given on a close over
the 9-bar moving average. The market’s close above the 2nd swing resistance
number is a bullish indication. The next upside target is 548 1/4. The next area
of resistance is around 544 3/4 and 548 1/4, while 1st support hits today at 533
1/4 and below there at 525 1/2.
MEAL (DEC) 10/12/2004: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The close above the 9-day moving average is a positive
short-term indicator for trend. There could be more upside follow through since
the market closed above the 2nd swing resistance. The near-term upside objective
is at 166.1. The next area of resistance is around 165.1 and 166.1, while 1st
support hits today at 161.5 and below there at 158.8.
BEANOIL (DEC) 10/12/2004: Daily stochastics are
showing positive momentum from oversold levels, which should reinforce a move
higher if near-term resistance is taken out. The market’s short-term trend is
positive on the close above the 9-day moving average. There could be more upside
follow through since the market closed above the 2nd swing resistance. The
near-term upside target is at 21.37. The next area of resistance is around 21.20
and 21.37, while 1st support hits today at 20.69 and below there at 20.34.
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WHEAT MARKET RECAP
10/11/2004
December Wheat finished down 1/4 at 303, 2 off the high and 1
3/4 up from the low. March Wheat closed unchanged at 315. This was 3 up from the
low and 1/2 off the high.
The market saw some long liquidation selling
ahead of the key USDA reports in the morning as the China news and a lack of
other export news had traders fearful that US prices may still be a bit too high
to compete on the world market. News that China bought 700,000 tons of wheat
from France helped to trigger the early weakness and fears that tomorrow
morning’s USDA Supply/demand report will show a whopping world crop outlook
added to the bearish tone. Traders look for few changes in the world
supply/demand report with crop production close to last months estimate of 610.5
million tons which would be the highest since 1997/98. According to the
Commitment-of-Traders report with options, the fund traders are holding a record
net short position of over 29,000 contracts as of October 5th. Weekly export
inspections and weekly crop progress reports will be released on Tuesday due to
government holiday today. December wheat support comes in at 302 and 299 with
307 1/2 and 315 1/4 as next resistance.
Technical Outlook
WHEAT (DEC) 10/12/2004: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. 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 299 1/2. The next area of
resistance is around 304 3/4 and 306 3/4, while 1st support hits today at 301
1/4 and below there at 299 1/2.
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LIVE CATTLE RECAP
10/11/2004
December Live Cattle closed up 0.17 at 88.67.
This was 0.37 up from the low and 0.32 off the high.
November Feeder Cattle finished up 0.67 at
112.00, 0.20 off the high and 0.40 up from the low.
After choppy, two-sided trade early in the
session, the market showed some strength late. The premium of futures to cash
was seen as a slight obstacle to finding new speculative buyers but the surge in
beef prices helped support. Boxed-beef cutout values (600-750 choice) were up
$2.37 on the day at mid-session to $134.93 as compared with $134.72 last week at
this time. The premium of futures to the cash market could leave feedlots an
incentive to over-feed cattle to higher weights in anticipation of higher cash
markets ahead. However, after last weeks cash traded near steady, traders feel
that available supplies will begin to dwindle in the weeks ahead. Traders are
looking for slaughter for Monday to come in near 118,000-122,000 head.
Technical Outlook
CATTLE (DEC) 10/12/2004: Rising stochastics at
overbought levels warrant some caution for bulls. The market’s close above the
9-day moving average suggests the short-term trend remains positive. The market
has a slightly positive tilt with the close over the swing pivot. The near-term
upside objective is at 89.350. The next area of resistance is around 89.020 and
89.350, while 1st support hits today at 88.320 and below there at 87.970.
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LEAN HOGS RECAP
10/11/2004
December Lean Hogs closed down 0.40 at 66.30.
This was 0.25 up from the low and 0.90 off the high.
February Pork Bellies finished down 0.90 at
95.50, 0.42 off the high and 0.27 up from the low.
While the October futures were under pressure
from weakness in the cash markets with live markets down as much as $2.00 at
many locations, December hogs found support from the stiff discount of futures
to the cash market. Improved packer profit margins over the past week helped to
provide support as margins have recovered from deep in the red last week due to
declining cash markets and steady pork cut-out values. The slower slaughter pace
has helped support cut-out values. The CME 2-Day Lean Index for the period
ending October 7th was reported at 77.01 which was down 90 cents from the
previous session but still near 1000 points premium to the December futures.
Traders are looking for slaughter for Monday to come in near 382,000-392,000
head.
Technical Outlook
HOGS (DEC) 10/12/2004: Momentum studies are still
bearish but are now at oversold levels and will tend to support reversal action
if it occurs. A negative signal for trend short-term was given on a close under
the 9-bar moving average. The daily closing price reversal down puts the market
on the defensive. The market tilt is slightly negative with the close under the
pivot. The next downside objective is 65.320. The next area of resistance is
around 66.870 and 67.600, while 1st support hits today at 65.750 and below there
at 65.320.
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COCOA MARKET RECAP
10/11/2004
December Cocoa finished up 35 at 1460, 5 off the
high and 38 up from the low.
The cocoa market managed an impressive rally and
seemed to get the buying interest from talk about the ports possibly being
blocked by farmers that are unhappy with the farm gate price set by the
government. With the Ivory Coast setting the farm gate price at 390 CFA, it
seems that the farmers were hoping for something closer to 500. Considering that
flat prices of cocoa have fallen significantly it seems that the farmers are
looking for a substantial subsidy. If the political wild card remains the focal
point we have to think that commercial buyer will become a little more
interested in securing forward needs.
Technical Outlook
COCOA (DEC) 10/12/2004: Daily stochastics are
showing positive momentum from oversold levels, which should reinforce a move
higher if near-term resistance is taken out. 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. The near-term upside
target is at 1494. Short-term indicators suggest buying dips today. The next
area of resistance is around 1481 and 1494, while 1st support hits today at 1439
and below there at 1409.
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COFFEE MARKET RECAP
10/11/2004
December Coffee closed down 1.35 at 75.85. This
was 1.25 up from the low and 0.35 off the high.
The gap lower opening on a Monday is a bearish
technical development for coffee as the market is still in a selling, long
liquidation mode due to improved weather for the flowering period for the
2005/2006 crop out of Brazil. The market rallied into early October due to drier
than normal weather in Brazil key growing areas but more good rains for today
and Monday should help support even flowering for the new crop season ahead.
Mexico exports in September were just 104,529 bags, down 16% from last year
which left 2003/2004 exports at 2.421 million bags which was down 5.6% from the
previous year.
Technical Outlook
COFFEE (DEC) 10/12/2004: The major trend has
turned down with the cross over back below the 40-day moving average. 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 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
74.05. The next area of resistance is around 76.60 and 77.20, while 1st support
hits today at 75.05 and below there at 74.05.
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SUGAR MARKET RECAP
10/11/2004
March Sugar closed up 0.25 at 9.27. This was 0.29
up from the low and 0.03 off the high.
Trade house and fund buying supported a surge to
a new 3-year high for nearby futures on Monday as strength in London ahead of
the New York market opening primed the market for an upside break-out of a
recent 2-week consolidation. Surging energy markets and the outlook for a
significant world production deficit for the coming year helped to support. Some
hefty rains moving to Brazil early this week could stall the center-south
harvest in Brazil. Thailand cane production this year is expected near 59
million tons as compared with 64.48 million last year.
Technical Outlook
SUGAR (MAR) 10/12/2004: The market rallied to a
new contract high. Momentum studies are trending higher but have entered
overbought levels. The close above the 9-day moving average is a positive
short-term indicator for trend. There could be more upside follow through since
the market closed above the 2nd swing resistance. The near-term upside target is
at 9.52. The next area of resistance is around 9.43 and 9.52, while 1st support
hits today at 9.11 and below there at 8.89.
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COTTON MARKET RECAP
10/11/2004
December Cotton finished down 0.83 at 46.52, 0.88
off the high and 0.12 up from the low.
The cotton market fell below the prior weeks low
and would seem to be in the process of another long liquidation thrust.
Apparently weekend weather impacts in Texas weren’t that significant and it
would also seem like the market isn’t that concerned about the USDA moving to
lower production because of hurricane damage. The range of expectations on the
hurricane damage run from 300,000 to 900,000 bales and that so far hasn’t
changed the markets generally accepted over supply opinion. The USDA could move
to lower the Chinese crop and that could begin to help the market forge a bottom
as the combination of US crop losses, lower Chinese production and decent US
exports could begin to dampen the bear case.
Technical Outlook
COTTON (DEC) 10/12/2004: A crossover down in the
daily stochastics is a bearish signal. Momentum studies are still bearish but
are now at oversold levels and will tend to support reversal action if it
occurs. The close below the 9-day moving average is a negative short-term
indicator for trend. The close below the 1st swing support could weigh on the
market. The next downside objective is now at 45.71. The next area of resistance
is around 47.02 and 47.71, while 1st support hits today at 46.02 and below there
at 45.71.