Look For Better Fundamental News Flow On Wednesday Morning

The early bounce failed to attract new buying
support and a turn lower in soybeans pulled futures lower on the day. However, a
lack of producer selling and a firm cash market helped to support and the
highest close since October 28th leaves the market vulnerable to more
speculative short-covering. Export news is quiet and some commercial bull
spreading helped support December corn against March. The weekly crop progress
report from yesterday afternoon showed the corn crop at 86% harvested as
compared with trade estimates of 85-88% complete and 95% last year at this time.
Iowa and Minnesota are still lagging historical norms but a drier trend this
week in the region should help harvest to progress towards completion. The
Commitment-of-Traders report with options, also released yesterday afternoon,
showed the market in an oversold condition and the buying trend of the fund
trader (still net short near 74,000 contracts as of November 9th) was seen as a
positive force. March corn support comes in at 214 and 212 1/2 with resistance
at 215 3/4 and 220 1/2.

Technical Outlook

CORN (MAR) 11/17/2004: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. A positive signal for trend short-term was
given on a close over the 9-bar moving average. The upside closing price
reversal on the daily chart is somewhat bullish. It is a mildly bullish
indicator that the market closed over the pivot swing number. The near-term
upside objective is at 216 3/4. The next area of resistance is around 215 3/4
and 216 3/4, while 1st support hits today at 213 1/4 and below there at 211 3/4.

 

SOY COMPLEX RECAP

11/16/2004

January Soybeans finished up 4 3/4 at 540 1/2, 1
1/2 off the high and 9 1/4 up from the low. March Soybeans closed up 3 at 544
1/2. This was 9 up from the low and 1 off the high.

January Soymeal closed up 2.7 at 156.4. This was
4.1 up from the low and 0.1 off the high.

January Soybean Oil finished down 0.26 at 21.25,
0.32 off the high and 0.29 up from the low.

Talk of potential rust problems in the coming
year continued to support active short-covering in soybeans as speculators cover
part of their record net short position which was confirmed in the weekly
Commitment-of-Traders report. A slow pace of selling from US producers, firm
near-term export demand and some inflationary numbers for the financial markets
helped to support. PPI for last month was up 1.7% (20.4% annual rate) which has
the trade a bit concerned with inflationary buying in commodities from world
money managers. Harvest has reached 93% complete as compared with 94% as the
14-year average for this time of the year. After moving to the highest level
since October 27th, the strong close and confirmation that the Asian rust has
spread to many more fields in Louisiana keeps the short-term technical action
bullish and the market vulnerable to more short-covering. January futures are a
bit overbought after a 39 cent bounce off of the November 8th lows. Resistance
for January soybeans comes in at 541 and 548 with support at 536 1/2 and 529
3/4.

Technical Outlook

BEANS (JAN) 11/17/2004: 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 outside day up and close above the previous day’s
high is a positive signal. With the close over the 1st swing resistance number,
the market is in a moderately positive position. The next upside target is 549
1/4. The next area of resistance is around 545 3/4 and 549 1/4, while 1st
support hits today at 535 1/4 and below there at 528.

MEAL (JAN) 11/17/2004: The cross over and close
above the 40-day moving average indicates the longer-term trend has turned up.
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. The market has a bullish
tilt coming into today’s trade with the close above the 2nd swing resistance.
The next upside objective is 160.2. The next area of resistance is around 159.2
and 160.2, while 1st support hits today at 155.4 and below there at 152.5.

BEANOIL (DEC) 11/17/2004: 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 close below the 1st swing support could
weigh on the market. The near-term upside target is at 21.86. The next area of
resistance is around 21.55 and 21.86, while 1st support hits today at 20.95 and
below there at 20.65.

 

WHEAT MARKET RECAP

11/16/2004

December Wheat finished up 4 1/2 at 310 3/4, 1/4 off the high
and 5 1/4 up from the low. March Wheat closed up 5 at 322. This was 6 up from
the low and 1/2 off the high.

After a new contract low on Friday, the market
has quickly bounced back into the middle of the 6-week trading range. A 50% mark
of the October-November range for March wheat is at 322 with the 40-day moving
average at 322 1/2 and a move through these resistance levels could spark
additional short-covering on the week if there is a triggering factor. The
Commitment-of-Traders report with options, released after the close yesterday,
showed the market in a classic bearish set-up with funds short and small
speculators holding a net long position of nearly 11,000 contracts. The net
short position of the fund trader, however, reached a record high so the market
is vulnerable to active buying if resistance levels are violated. The winter
wheat crop is rated 78% in good to excellent condition, unchanged from last week
and up from 48% last year at this time. The crop is 93% planted as compared with
93% as the 14-year average for this time of the year. Traders await results of
the Iraq tender and hope for a tender from Pakistan soon. Taiwan is tendering
for 42,500 tons of US wheat. March wheat support comes in at 317 and 311 with
resistance at 322 and 325 1/4.

Technical Outlook

WHEAT (MAR) 11/17/2004: The daily stochastics
have crossed over up which is a bullish indication. 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. Market positioning is positive with the close
over the 1st swing resistance. The next upside target is 327. The next area of
resistance is around 325 1/4 and 327, while 1st support hits today at 318 3/4
and below there at 314 1/4.

 

LIVE CATTLE RECAP

11/16/2004

December Live Cattle closed down 0.37 at 86.10.
This was 0.05 up from the low and 0.65 off the high.

January Feeder Cattle finished up 0.35 at 103.20,
0.45 off the high and 0.05 up from the low.

February cattle challenged last week’s highs
before seeing a sell-off to support and a lower close. The weather and the
continued uptrend in beef prices provided support and helped the market hold
support and bounce off of the lows. Boxed-beef prices were up $1.66 to $137.42
at mid-session as compared with $131.57 one week ago. A lack of a weather
premium, a potential drop in weights due to more muddy conditions at feedlots
this week and positioning ahead of the Cattle-on-Feed report added to the
supportive factors. Traders look for the Cattle-on-Feed report on Friday to show
on-feed supply on November 1st at 102.3% (range 101-103) with October placements
near 96% (range 89-101) and October marketings near 95.5% (92-98). Retracement
support for February cattle is back at 87.32 with 89.87 as next upside
objective.

Technical Outlook

CATTLE (DEC) 11/17/2004: Positive momentum
studies in the neutral zone will tend to reinforce higher price action. The
market’s close above the 9-day moving average suggests the short-term trend
remains positive. The downside closing price reversal on the daily chart is
somewhat negative. It is a slightly negative indicator that the close was under
the swing pivot. The near-term upside target is at 86.950. The next area of
resistance is around 86.450 and 86.950, while 1st support hits today at 85.770
and below there at 85.570.

 

LEAN HOGS RECAP

11/16/2004

December Lean Hogs closed down 0.40 at 74.37.
This was 0.42 up from the low and 1.37 off the high.

February Pork Bellies finished down 0.25 at
100.65, 1.70 off the high and 0.05 up from the low.

February hogs pushed sharply higher and to new
contract highs early in the session but selling emerged above 75.00 and the
market set back towards the opening into the close. The early surge was
supported by news of $1.50 higher cash markets at some of the terminals which
helped support increased speculative buying with February hogs trading at a
discount to the cash market. In addition, packers slaughtered 404,000 head on
Monday which is near capacity and may be an all-time record high and shows
strong packer demand. For today, traders look for slaughter near 395,000-402,000
head. For the weekly cold storage report, traders look for out-of-town movement
of 1.8-2.0 million pounds of bellies to move into cold storage for the week. The
CME 2-Day Lean Index for the period ending November 12th was reported at 75.78,
up $.49 from the previous session and up from 74.77 the previous week.

Technical Outlook

HOGS (DEC) 11/17/2004: The rally brought the
market to a new contract high. 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
daily closing price reversal down is a negative indicator for prices. It is a
slightly negative indicator that the close was under the swing pivot. The next
upside target is 76.400. The next area of resistance is around 75.250 and
76.400, while 1st support hits today at 73.500 and below there at 72.820.

 

COCOA MARKET RECAP

11/16/2004

December Cocoa finished down 62 at 1689, 51 off
the high and 7 up from the low.

There was a violent trade in the cocoa Tuesday,
as a number of small specs decided to run out of the market in the face of a
failure on the charts. The London market was supposedly under pressure as a
result of renewed origin selling and that means that the small specs and the
producers were selling. If enough chart support levels are violated that might
result in the funds becoming sellers and that would really put pressure on
prices. Supposedly supply is building at Ivory Coast warehouses as shipping
space is tight and that could be a bear or bull item. As long as cocoa is out of
the bush and in mostly secure locations at the Port it would be surprising to
see that supply threatened but as long as supply is in the country one might
attach some risk premium to the situation.

Technical Outlook

COCOA (DEC) 11/17/2004: Daily stochastics turning
lower from overbought levels is bearish and will tend to reinforce a downside
break especially if near-term support is penetrated. A negative signal for trend
short-term was given on a close under the 9-bar moving average. The close below
the 2nd swing support number puts the market on the defensive. The next downside
target is now at 1642. The next area of resistance is around 1718 and 1758,
while 1st support hits today at 1660 and below there at 1642.

 

COFFEE MARKET RECAP

11/16/2004

December Coffee closed down 5.60 at 86.05. This
was 0.30 up from the low and 2.65 off the high.

The coffee market gave back about half of the
gains from Monday on ideas that futures ate overbought and from expectations of
more active producer selling ahead. Producer selling was noted in London with
the Vietnam bumper harvest expected to get more active in the weeks ahead. Ideas
that the earthquake in Colombia failed to cause problems for the coffee industry
and a bearish US monthly stocks report added to the long liquidation sell-off.
In addition, the Monday rally came on a holiday for Brazil and Colombia trade
houses and commercial selling was more active. Brazil coop stocks at the end of
October stood at 7.89 million bags from 7.63 million the previous month and 7.01
million last years.

Technical Outlook

COFFEE (DEC) 11/17/2004: 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. The market’s close above the 9-day moving average suggests the
short-term trend remains positive. It is a slightly negative indicator that the
close was lower than the pivot swing number. The next downside objective is now
at 83.70. The next area of resistance is around 87.50 and 89.55, while 1st
support hits today at 84.60 and below there at 83.70.

 

SUGAR MARKET RECAP

11/16/2004

March Sugar closed up 0.18 at 8.87. This was 0.16
up from the low and 0.02 off the high.

The first close above the 40-day moving average
since October 26th leaves the technical action bullish and could attract more
buying this week. The basic fundamentals for the market look positive but the
market remains concerned with high freight rates and slow demand from India.
India buyers will need to switch to white sugar in about 1 months time as the
window to process raw sugar will be past. Talk that heavy rains in Brazil have
slowed harvest and firmed cash markets helped support. In addition, a strong
stopper of 1915 contracts in London added to the positive tone. Routine demand
is expected to pick-up in the Middle East with improved demand with Ramadan
past. March sugar support moves up to 872 with 898, 937 and possibly 976 as
upside objectives on a resumption of the uptrend.

Technical Outlook

SUGAR (MAR) 11/17/2004: The market now above the
40-day moving average suggests the longer-term trend has turned up. 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. The market’s close above the 2nd swing
resistance number is a bullish indication. The next upside objective is 9.01.
The next area of resistance is around 8.96 and 9.01, while 1st support hits
today at 8.78 and below there at 8.66.

 

COTTON MARKET RECAP

11/16/2004

December Cotton finished up 1.68 at 46.59, 0.81
off the high and 1.39 up from the low.

March cotton saw a 125 point recovery bounce
early in the session but the bearish fundamentals continue to weigh on world
prices and the market sees trade house selling emerge on each rally attempt.
Traders are trying to determine “how low is low” but the emergence of foreign
growths on the world market continues to pressure world values. The downtrend in
cash markets has kept buyers with a hand-to-mouth buying pattern which has added
to the bearish tone. March futures have hit new contract lows in 7 of the past
12 trading sessions. The fareastern A Index from Cotlook was down 85 cents to
46.85. More rain moving into the Lubbock Texas region this afternoon helped
provide some support late in the session. The Texas crop was just 41% harvested
as of November 14th as compared with 59% on average for this time of the year.

Technical Outlook

COTTON (DEC) 11/17/2004: The cross over and close
above the 40-day moving average is an indication the longer-term trend has
turned positive. Momentum studies are rising from mid-range, which could
accelerate a move higher if resistance levels are penetrated. The market’s
short-term trend is positive on the close above the 9-day 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 48.64. The next area of resistance
is around 47.69 and 48.64, while 1st support hits today at 45.49 and below there
at 44.25.