More Selling Pressure To End The Week?

Positioning ahead of the USDA Supply/demand
report triggered the sell-off and the lack of follow-through technical
buying after the reversal yesterday keeps the technical set-up mostly
bearish. The trade was inside of yesterday’s relatively wide range, as the
market quiets down in anticipation of tomorrow morning’s USDA Supply/Demand
Report. This morning’s weekly export sales report showing net corn sales of
915,000 metric tons for the week ending December 2nd was neutral against
trade expectations. While this was higher than the 802,000 metric tons
needed to meet the USDA projection for the marketing year, sales are running
slightly behind pace. So far this year, cumulative sales have reached 40.1%
of the USDA forecast, which is behind the 5 year average of 42.2% for this
time of the year. The trade expects the USDA report to show an increase in
ending stocks from an already burdensome level, and some traders are looking
for China production to be revised higher than last month’s 126 million
tons. US ending stocks are expected to jump by near 35-40 million bushels as
compared with 1.819 billion bushels last month. While deliveries are still
hefty at 287 contracts, a strong commercial stopper of 286 lots helped to
provide some underlying support. Support for March Corn comes in at 201 3/4
and 200 1/2 with resistance at 205 1/2 and 206 1/4.

Technical Outlook

CORN (MAR) 12/10/2004: A crossover down in
the daily stochastics is a bearish signal. Daily stochastics are trending
lower but have declined into oversold territory. The close below the 9-day
moving average is a negative short-term indicator for trend. The market’s
close below the pivot swing number is a mildly negative setup. The next
downside objective is now at 201 3/4. The next area of resistance is around
203 3/4 and 204 1/2, while 1st support hits today at 202 1/4 and below there
at 201 3/4.

 

SOY COMPLEX RECAP

12/9/2004

January Soybeans finished down 2 3/4 at 526
1/2, 3 1/2 off the high and 2 1/2 up from the low. March Soybeans closed
down 3 at 526 1/2. This was 3 up from the low and 3 off the high.

January Soymeal closed down 1.5 at 156.8.
This was 0.3 up from the low and 1.2 off the high.

January Soybean Oil finished down 0.16 at
19.67, 0.26 off the high and 0.02 up from the low.

Slow weekly sales, perceptions that the South
American crop is off to a good start and expectations for higher ending
stocks for the USDA report in the morning helped pressure the market. Funds
were noted sellers of near 2000 contracts into the mid-session. Weekly
export sales came in at 445,900 metric tons for soybeans, which was below
expectations. This compares with 280,900 needed to reach the USDA forecast
for the marketing year. So for this year, cumulative sales have reached
60.3% of the USDA forecast for the entire year, which is slightly behind the
average pace of 62.3%. China was noted in the sales total as a negative
10,600 tons and the cancellation was seen as a negative development. Meal
sales were 83,200 metric tons, which was neutral against expectations, and
bean oil sales came in at 17,500 mt, which was well above expectations.
March beans stayed inside of yesterday’s range, and some position squaring
was noted in advance of tomorrow’s USDA Supply/Demand report. Traders look
for ending stocks to increase by near 15-20 million bushels from last months
forecast at 460 million bushels. Resistance for January soybeans comes in at
528 1/2 and 532 1/2 with support at 518 and 514 3/4.

Technical Outlook

BEANS (JAN) 12/10/2004: 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. It is a
slightly negative indicator that the close was under the swing pivot. The
next downside objective is 520 3/4. The next area of resistance is around
529 1/2 and 532 3/4, while 1st support hits today at 523 1/2 and below there
at 520 3/4.

MEAL (JAN) 12/10/2004: Stochastics trending
lower at midrange will tend to reinforce a move lower especially if support
levels are taken out. The close above the 9-day moving average is a positive
short-term indicator for trend. The market’s close below the pivot swing
number is a mildly negative setup. The next downside objective is now at
154.7. The next area of resistance is around 157.8 and 159.2, while 1st
support hits today at 155.6 and below there at 154.7.

BEANOIL (JAN) 12/10/2004: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon.
The close below the 9-day moving average is a negative short-term indicator
for trend. It is a slightly negative indicator that the close was lower than
the pivot swing number. The next downside target is 19.51. With a reading
under 30, the 9-day RSI is approaching oversold levels. The next area of
resistance is around 19.93 and 20.16, while 1st support hits today at 19.61
and below there at 19.51.

 

WHEAT MARKET RECAP

12/9/2004

December Wheat finished up 2 3/4 at 290, 1 off the high
and 2 1/2 up from the low. March Wheat closed up 2 at 302. This was 2 1/2 up
from the low and 2 off the high.

Rumors that China may be in talks with the
Canadian Wheat Board to cancel shipment of up to 200,000 tons of milling
wheat helped provide support. The rally helped confirm the daily reversal
from yesterday and helps improve the short-term technical picture for March
wheat. Solid weekly sales numbers and news of interest from Pakistan for
500,000 tons and Iraq for up to 150,000 tons added to the positive tone.
Weekly export sales, released before the opening this morning were viewed as
supportive at 509,500 metric tons, which was above expectations. This
compares with 291,300 needed to meet the USDA projection for the year. So
far this season, cumulative sales have reached 71.6% of the USDA forecast
for the season, which is better than the 5-year average pace of 61.3% for
the year so far. This has some traders expecting the USDA to revise
forecasted exports higher in tomorrow morning’s Supply/Demand Report.
Traders look for a 15-20 million bushel decline in ending stocks for the
report tomorrow as compared with last months estimate of 568 million
bushels. The EU awarded 171,000 tonnes of wheat at their weekly tender.
Funds were noted buyers of near 1500 contracts into the mid-session. Support
for March wheat comes in at 300 and 297 with 307 and 313 1/4 as resistance.

Technical Outlook

WHEAT (MAR) 12/10/2004: The crossover up in
the daily stochastics is a bullish signal. Rising from oversold levels,
daily momentum studies would support higher prices, especially on a close
above resistance. The market’s close above the 9-day moving average suggests
the short-term trend remains positive. With the close higher than the pivot
swing number, the market is in a slightly bullish posture. The next upside
objective is 306 1/4. The next area of resistance is around 304 1/4 and 306
1/4, while 1st support hits today at 299 3/4 and below there at 297 1/2.

 

LIVE CATTLE RECAP

12/9/2004

February Live Cattle closed down 1.35 at
86.70. This was 0.10 up from the low and 1.20 off the high.

January Feeder Cattle finished down 1.57 at
100.85, 1.35 off the high and 0.35 up from the low.

February cattle closed 135 lower on the
session and moved to the lowest level since November 23rd as lower beef
prices and expectations for a weaker cash market price this week helped
pressure. Boxed-beef cut-out values at mid-session were down $1.21 to
$145.03 as compared with 149.18 last week at this time. Rumors that Kansas
cattle traded at $86.00 added to the bearish tone. Slaughter came in at
119,000 head as compared with trade expectations at 124,000-128,000. The low
slaughter could indicate weaker packer demand (and pinched profit margins)
which could add to the bearish psychology for Friday.

Technical Outlook

CATTLE (FEB) 12/10/2004: Momentum studies
trending lower at mid-range could accelerate a price break if support levels
are broken. The market’s close below the 9-day moving average is an
indication the short-term trend remains negative. The close below the 1st
swing support could weigh on the market. The next downside target is now at
85.700. The next area of resistance is around 87.320 and 88.250, while 1st
support hits today at 86.050 and below there at 85.700.

 

LEAN HOGS RECAP

12/9/2004

February Lean Hogs closed down 0.62 at 71.67.
This was 1.12 up from the low and 0.57 off the high.

February Pork Bellies finished up 0.05 at
97.27, 0.70 off the high and 1.02 up from the low.

February hogs closed 62 lower on the session
but the close was above the opening and up 102 points from the lows of the
day. The reversal type action from a key support level (70.52) could
indicate a near-term low is in place. Fund selling led by long liquidation
and additional stop-loss selling helped to pressure the market after a sharp
break in pork cut-out values was reported on Wednesday evening which
included a collapse in ham prices. The CME 2-day lean index for the period
ending December 7th was reported at 80.74, down $.51 on the session and up
from 77.98 last week. This leaves February hogs at a 907 point discount to
the cash market as compared with a typical premium of 200-400 points at this
time of the year. Slaughter came in at 398,000 head as compared with
396,000-401,000 head expected.

Technical Outlook

HOGS (FEB) 12/10/2004: Momentum studies are
still bearish but are now at oversold levels and will tend to support
reversal action if it occurs. The market’s close below the 9-day moving
average is an indication the short-term trend remains negative. The market’s
close below the 1st swing support number suggests a moderately negative
setup for today. The next downside target is 69.850. The next area of
resistance is around 72.500 and 73.220, while 1st support hits today at
70.820 and below there at 69.850.

 

COCOA MARKET RECAP

12/9/2004

March Cocoa finished down 12 at 1638, 32 off
the high and 6 up from the low.

NY Cocoa saw more spec today in the face of
further strength in the US Dollar. The stronger Dollar encourages traders to
sell NY futures and buy the London contract for arbitrage purposes.
Anecdotal reports of reduced harvests in the Doala region of the Ivory Coast
due to dryness and a lack of pesticides and fertilizer offered little
support as the extent of the potential problems have not been quantified.
The next main area of support in the March contract is down at the
$1,616-$1,600 gap area left on November 30.

Technical Outlook

COCOA (MAR) 12/10/2004: Momentum studies are
trending higher from mid-range, which should support a move higher if
resistance levels are penetrated. 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 under the swing pivot. The
next upside target is 1682. The next area of resistance is around 1657 and
1682, while 1st support hits today at 1619 and below there at 1607.

 

COFFEE MARKET RECAP

12/9/2004

March Coffee closed down 0.10 at 97.95. This
was 1.00 up from the low and 2.55 off the high.

For the second day in a row, March coffee
bounced all the way to 100.50 before drifted lower but closed 10 lower on
the session. News that Folgers raised prices helped to limit the buying
support and light long liquidation selling pressured the market after the
early sharp gains. Prices were increased for the first time in more than 2
years with roast-and-ground prices up 14%. Positioning ahead of the Brazil
official crop estimates for the 2004/2005 and 2005/2006 crops helped to keep
the market within the recent consolidation. Producers believe the 2005/2006
crop estimate will come in near 30 million bags while trade houses seem to
be closer to the 35-36 million bag level with estimates as high as 40
million. Brazil will also release the final crop estimate for the 2004/2005
season with talk of only minor adjustments from the August forecast of 38.26
million bags from 28.8 million the previous year. Uganda exported 182,881
bags of coffee in November which was up from 137,920 bags last year. For the
first two months of the marketing year, exports are 368,814 bags, up 35.7%
from last year.

Technical Outlook

COFFEE (MAR) 12/10/2004: Momentum studies are
trending lower from high levels which should accelerate a move lower on a
break below the 1st swing support. The market’s short-term trend is positive
on the close above the 9-day moving average. The market tilt is slightly
negative with the close under the pivot. The next downside objective is
94.80. The next area of resistance is around 99.70 and 101.85, while 1st
support hits today at 96.20 and below there at 94.80.

 

SUGAR MARKET RECAP

12/9/2004

March Sugar closed down 0.08 at 8.66. This
was 0.01 up from the low and 0.13 off the high.

The lowest close since November 12th for
March sugar (down 8 to 866) leaves the market in a weak technical position
and vulnerable to long liquidation selling with speculators holding a
massive net long position at the end of November. Trade was slow and
speculative action is quieting down so the long liquidation threat is
significant if speculators decide to step to the sidelines for the holiday
period ahead. On the other hand, increased cash business and purchases by
India this week suggest the cash activity may be picking up. The Cuba
harvest is expected to start on Friday and the trade sees the crop at below
1.8 million tons. Cuba has not produced a crop under 1.8 million tons since
1909 but the worst drought in 40 years and reduce cane acreage has led to
the disastrous crop. Last years crop was 2.52 million tons. The EU sold
56,985 tonnes of white sugar at their weekly tender as compared with trade
expectations at 50,000-80,000 tons. India bought 100,000-120,000 tons of raw
sugar this week and traders believe that India could buy another 2-3 million
tons to offset a shortage for the October 2004 to September 2005 time frame.

Technical Outlook

SUGAR (MAR) 12/10/2004: Momentum studies
trending lower at mid-range could accelerate a price break if support levels
are broken. A negative signal for trend short-term was given on a close
under the 9-bar moving average. The market’s close below the pivot swing
number is a mildly negative setup. The next downside target is now at 8.55.
The next area of resistance is around 8.73 and 8.83, while 1st support hits
today at 8.59 and below there at 8.55.

 

COTTON MARKET RECAP

12/9/2004

March Cotton finished up 0.26 at 42.86, 0.19
off the high and 0.26 up from the low.

March cotton inched higher ahead of the USDA
Supply/demand report which will be released before the opening on Friday led
by solid export sales news. This morning’s weekly export sales report
showing net cotton sales of 339,300 bales for the week ending December 2nd
was a marketing year high as compared with trade expectations at
150,000-200,000 bales. Sales need to average 123,600 bales each week to
reach the USDA projection for the marketing year. So far this year,
cumulative sales have reached 62.2% of the USDA forecast, which is behind
the 5 year average of 67.3% for this time of the year. Traders are nervous
that the report could show a record world production forecast of more than
111.72 million bales from last month as a decline for China production could
be more than offset by increases for Pakistan and India. However,
expectations for a bullish demand tone for the market has helped to keep
trade choppy ahead of the report. Good weather for harvest in the forecast
for the next week helped to limit the advance. Certified cotton stocks which
are deliverable against the exchange continue to rise over the past few
weeks and as of December 8th reached 94,912 bales from 94,034 bales the
previous session and from 63,619 bales on November 16th.

Technical Outlook

COTTON (MAR) 12/10/2004: 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. With the close over the
1st swing resistance number, the market is in a moderately positive
position. The next downside target is 42.40. The next area of resistance is
around 43.08 and 43.29, while 1st support hits today at 42.64 and below
there at 42.40.