Mad Cow! Here’s What Happened To Cattle…

Fears of more exports from China and that
producer selling will increase on the jump off of last weeks lows helped limit
the buying support for corn. Expectations for bearish supply news for the USDA
reports for release on Wednesday morning helped trigger the selling pressures
after the higher opening. For December 1st stocks, traders look for stocks to be
up more than 1.3 billion bushels from last year (7.954 billion bushels). US
production and US ending stocks are also expected to see revisions higher. The
flurry of exports overnight failed to provide much support except for the higher
opening. South Korea bought 52,500 tons of optional origin corn overnight and
also 47,000 tons from China. South Korea is also tendering for 55,000 tons of
optional origin corn. Midwest basis levels were mixed which could be an
indication that producer sellers are a bit more active. Resistance for March
corn comes in at 207 3/4 and 209 1/4 with support at 206 1/4 and 205.

Technical Outlook

CORN (MAR) 01/12/2005: 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 mildly bullish indicator that the
market closed over the pivot swing number. The next upside objective is 208 1/2.
The next area of resistance is around 207 1/2 and 208 1/2, while 1st support
hits today at 206 and below there at 205 1/4.

 

SOY COMPLEX RECAP

1/11/2005

March Soybeans finished down 5 1/4 at 543 1/4, 7
3/4 off the high and 3 up from the low. May Soybeans closed down 4 1/2 at 546
1/2. This was 2 1/2 up from the low and 7 1/2 off the high.

March Soymeal closed down 1.3 at 165.2. This was
1.4 up from the low and 2.1 off the high.

March Soybean Oil finished down 0.3 at 19.97,
0.36 off the high and 0.07 up from the low.

The rally in futures has increased producer
selling in the cash market and weakened the cash basis levels. Early strength in
the January futures helped support the trade early but ideas that futures are a
bit overbought ahead of a key USDA report day on Wednesday helped to trigger the
sell-off into the mid-session. Some concerns that bird flu could weaken demand
in China and Asia for meal and for extending coverage in soybeans if the flu
continues to spread was seen as a potential bearish force. There were no
deliveries for meal or soybeans this morning but 194 lots delivered against the
January oil helped pressure the market. Traders assume that world money managers
are shifting some assets into commodities for 2005 but the fund buying in the
soybean complex seems to have been smaller than in corn and wheat in the past
week. Positioning for the Wednesday morning USDA production, stocks and
supply/demand reports is adding to the choppy trade. South Korea bought 52,500
tons of US soybeans overnight. A Reuters survey of 578 farmers attending the
American Farm Bureau Federation’s annual meeting showed that 82% of the US
farmers will not cut planted acreage this season due to rust. Resistance for
March soybeans comes in at 548 and 553 with support at 540 3/4 and 537 3/4.

Technical Outlook

BEANS (MAR) 01/12/2005: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The cross over and close above the 18-day moving average
is an indication the longer-term trend has turned positive. The downside closing
price reversal on the daily chart is somewhat negative. It is a slightly
negative indicator that the close was lower than the pivot swing number. The
near-term upside objective is at 555. The next area of resistance is around 548
1/2 and 555, while 1st support hits today at 538 and below there at 533 3/4.

MEAL (MAR) 01/12/2005: The moving average
crossover up (9 above 18) indicates a possible developing short-term uptrend.
Stochastics are at mid-range but trending higher, which should reinforce a move
higher if resistance 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. The market could take on a defensive posture with the daily closing
price reversal down. The market tilt is slightly negative with the close under
the pivot. The near-term upside objective is at 168.8. The next area of
resistance is around 166.9 and 168.8, while 1st support hits today at 163.5 and
below there at 161.9.

BEANOIL (MAR) 01/12/2005: 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 18-day moving average is an indication
the longer-term trend has turned down. The market’s close below the 1st swing
support number suggests a moderately negative setup for today. The next downside
target is now at 19.62. The next area of resistance is around 20.18 and 20.47,
while 1st support hits today at 19.76 and below there at 19.62.

 

WHEAT MARKET RECAP

1/11/2005

March Wheat finished down 1 1/4 at 306 1/2, 4 off the high and
2 up from the low. May Wheat closed down 1 1/4 at 314. This was 1 3/4 up from
the low and 3 1/2 off the high.

News that Iraq bought 300,000 tons of US wheat at
their tender and that Taiwan bought 82,190 tons of US wheat helped support the
market early in the session but a lack of new fund buying helped to trigger more
two-sided trade into the mid-session. Tunisia also announced a tender to buy at
least two cargoes of soft wheat. Fund buying seems to have slowed after the
active pace of late last week. Positioning for key USDA reports for 2005 planted
acreage, December 1st Wheat Stocks and Supply/Demand helped to keep the trade
choppy but mostly lower for much of the session. Traders are looking for lower
planted acreage due to wet weather in the soft red wheat areas for the planting
season while hard red acreage is expected to be slightly higher than last year.
December 1st stocks are expected to come in about 95 million bushels below last
year (1.52 billion bushels). Argentina wheat harvest has reached near 93%
complete with Argentina exchange forecasts for production still near 16.3
million tons as compared with last months USDA forecast at 15 million tons.
March wheat resistance comes in at 309 and 311 1/2 with support at 304 1/2 and
302.

Technical Outlook

WHEAT (MAR) 01/12/2005: The moving average
crossover down (9 below 18) indicates a possible developing short-term
downtrend. Studies are showing positive momentum but are now in overbought
territory, so some caution is warranted. The major trend could be turning up
with the close back above the 18-day 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 upside target is 313. The next
area of resistance is around 309 1/2 and 313, while 1st support hits today at
303 1/2 and below there at 301.

 

LIVE CATTLE RECAP

1/11/2005

February Live Cattle finished up 1.32 at 91.87,
0.87 off the high and 1.22 up from the low.

January Feeder Cattle closed up 0.82 at 105.65.
This was 1.45 up from the low and 0.35 off the high.

Cattle pushed sharply higher on widespread rumors
that Canada is about to announce another case of mad cow and over speculation
that the US is considering withdrawing plans to re-open the border on March 7th.
Cold and wintry weather in the plains and sharply higher beef prices in the past
several days added to the bullish tone. Boxed-beef cut-out values were up $2.51
to $150.13 at mid-session as compared with $140.26 one week ago. The
packer-induced cut-back on slaughter is expected to support beef prices but the
surge in beef might be enough to support better margins and a return to a more
active pace.

Technical Outlook

CATTLE (FEB) 01/12/2005: The rally brought the
market to a new contract high. 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
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 objective is at
93.870. The next area of resistance is around 92.900 and 93.870, while 1st
support hits today at 90.820 and below there at 89.700.

 

LEAN HOGS RECAP

1/11/2005

February Lean Hogs finished up 2.00 at 77.05,
equal to the high and 2.10 up from the low.

February Pork Bellies closed up 0.22 at 97.20.
This was 0.75 up from the low and 1.05 off the high.

Futures moved sharply higher and February hogs
hit limit-up on expectations for continued strong demand for the first half of
the year. Rumors that there is likely another mad cow case to be reported in
Canada helped relieve fears that pork exports might slow if the border was going
to open up in early March. Weather could limit producer marketings for the rest
of the week in the western cornblet with snow, ice and then bitter cold weather
expected to keep hogs inside. The 2-Day Lean index for the period ending January
7th was up.95 to 701.27 as compared with 65.09 last week at this time. Slaughter
was higher than expected this week as profit margins remain firm; especially
after further gains in pork product prices.

Technical Outlook

HOGS (FEB) 01/12/2005: A bullish signal was given
with an upside crossover of the daily stochastics. Rising stochastics at
overbought levels warrant some caution for bulls. The market now above the
18-day moving average suggests the longer-term trend has turned up. The market
has a bullish tilt coming into today’s trade with the close above the 2nd swing
resistance. The next upside objective is 78.620. The next area of resistance is
around 78.100 and 78.620, while 1st support hits today at 76.020 and below there
at 74.450.

 

COCOA MARKET RECAP

1/11/2005

March Cocoa finished up 2 at 1468, 14 off the
high and 4 up from the low.

The cocoa market seemed to respect the prior days
low and might have been supported by the oversold technical condition and that
early November consolidation lows on the charts. Keeping pressure on cocoa
prices were reports Tuesday that Nigerian production might actually come in a
little higher than previously expected. Apparently rain at just the right time
helped to improve the Nigerian crop and right now the market hardly needs a
fresh negative to maintain control over the market. It is also possible that a
consistently lower US Dollar is discouraging sellers from attacking cocoa so
close to the last 6 months lows.

Technical Outlook

COCOA (MAR) 01/12/2005: Daily stochastics are
trending lower but have declined into oversold territory. The market back below
the 18-day moving average suggests the longer-term trend could be turning down.
It is a slightly negative indicator that the close was under the swing pivot.
The next downside objective is 1453. The market is approaching oversold levels
on an RSI reading under 30. The next area of resistance is around 1477 and 1488,
while 1st support hits today at 1459 and below there at 1453.

 

COFFEE MARKET RECAP

1/11/2005

March Coffee closed up 0.05 at 95.65. This was
0.15 up from the low and 1.60 off the high.

The coffee market closed near unchanged after
mostly higher trade early in the session. The close was near the lows of the day
and below the opening which would be considered a bearish short-term technical
development. Short covering was said to have supported the early gains and a
slowdown in the long liquidation selling from fund traders also gave the market
relief. The Council of Green Coffee Exporters of Brazil indicated that exports
this year should be near 19.7 million bags, down 15% from 2004. December exports
were pegged at 2.49 million bags which was up 16% from the previous year. Total
2004 exports were 23.25 million bags, up 1.7% from the previous year.

Technical Outlook

COFFEE (MAR) 01/12/2005: Momentum studies are
declining, but have fallen to oversold levels. The major trend has turned down
with the cross over back below the 18-day moving average. It is a slightly
negative indicator that the close was lower than the pivot swing number. The
next downside objective is 94.30. The next area of resistance is around 96.50
and 97.75, while 1st support hits today at 94.80 and below there at 94.30.

 

SUGAR MARKET RECAP

1/11/2005

March Sugar closed up 0.03 at 8.55. This was 0.03
up from the low and 0.10 off the high.

The sugar market closed 3 higher on the day but
down 10 from the highs of the day as the trade house buying to support the
market early failed to find new buying interest from the speculator. Talk of
active buying from India helped to provide support with cash traders expecting
that 100,000-300,000 tons of raw sugar may have been bought by India in the past
several days. Continued fears of more long liquidation from the speculator
helped limit the buying support. Fund activity was quiet which is a bit
different than recent days.

Technical Outlook

SUGAR (MAR) 01/12/2005: Momentum studies are
declining, but have fallen to oversold levels. The close below the 18-day moving
average is an indication the longer-term trend has turned down. It is a slightly
negative indicator that the close was lower than the pivot swing number. The
next downside objective is 8.44. The next area of resistance is around 8.61 and
8.69, while 1st support hits today at 8.49 and below there at 8.44.

 

COTTON MARKET RECAP

1/11/2005

March Cotton finished down 1.04 at 46.20, 0.80
off the high and 0.34 up from the low.

A fear that the USDA news for release on
Wednesday morning might not rationalize the sharp run-up in prices of the past
week helped trigger the long liquidation selling and lower close for cotton.
Rising exchange stocks added to the negative tone with certified stocks as of
January 10th to 61,639 bales from 60,969 bales the previous session. World
production was pegged at 114.02 million bales last month and there is talk that
production might be adjusted to over 115 million. While traders still hope for
an adjustment lower for the China crop, India and Pakistan crop production
numbers look to come in higher than last months forecast. It will take bullish
report news to justify the 554 bounce for May cotton off of the December 27th
lows.

Technical Outlook

COTTON (MAR) 01/12/2005: 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 market setup is
somewhat negative with the close under the 1st swing support. The near-term
upside target is at 47.45. The next area of resistance is around 46.77 and
47.45, while 1st support hits today at 45.63 and below there at 45.18.