Poor Market Action Today, But This Was The Surprising Thing

March corn ended the session 41 cents lower on
the week, after trading down to 152 1/4 (the contract low) for the second day in
row. The market stayed in a narrow range today, near the bottom of yesterday’s
range, but it failed to follow through and carve any new territory on the
downside. The deeply oversold condition of the market could have giving some
traders pause, especially in advance of this afternoon’s COT reports. South
Korea bought 55,000 tons of Non GMO corn from Cargill overnight. US Gulf basis
levels were most steady to lower this morning, but the market appeared to lack
enough near term activity to prompt significant change in this situation.
Resistance for March corn comes in at 197 1/2 and 198 3/4 with support at 195
1/4 and 191.

Technical Outlook

CORN (MAR) 01/31/2005: Daily stochastics are
trending lower but have declined into oversold territory. The close under the
18-day moving average indicates the longer-term trend could be turning down. It
is a slightly negative indicator that the close was lower than the pivot swing
number. The next downside objective is 194 3/4. The next area of resistance is
around 196 1/4 and 197, while 1st support hits today at 195 1/4 and below there
at 194 3/4.

 

SOY COMPLEX RECAP

1/28/2005

March Soybeans finished down 1 3/4 at 514, 3 1/2
off the high and 1 1/2 up from the low. May Soybeans closed down 1 at 513. This
was 1 1/2 up from the low and 2 1/2 off the high.

March Soymeal closed down 0.8 at 154.1. This was
0.1 up from the low and 1.1 off the high.

March Soybean Oil finished down 0.19 at 19.24,
0.27 off the high and 0.02 up from the low.

March soybeans ended the session 2 3/4 cents
lower on the week, after trading to their lowest level since November 9th
earlier today. May soybeans broke to new contract lows this morning on reports
of rainy weather in the forecast for key growing regions in Brazil over the
weekend. Rain is needed in Rio Grande do Sul as the crop there enters the pod
filling stage next month, and recent dry conditions have raised some level of
concern. Today Brazil raised its 2005/06 soybean crush forecast to 32.4 million
tons from its previous estimate of 32.2 million. Last year’s crush was estimated
at 29 million. Their soybean exports for 2005/06 were left unchanged at 22.5
million tons, versus 19.2 million for 2004/05. Reports of five more deaths from
bird flu in Vietnam add a negative tone as well, as this ongoing problem could
reduce poultry supplies and therefore feed demand. Resistance for March soybeans
comes in at 518 1/2 and 522 1/2 with support at 512 1/2.

Technical Outlook

BEANS (MAR) 01/31/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
major trend has turned down with the cross over back below the 18-day moving
average. The market setup is somewhat negative with the close under the 1st
swing support. The next downside target is now at 509 1/2. The next area of
resistance is around 516 1/2 and 519 1/2, while 1st support hits today at 511
1/2 and below there at 509 1/2.

MEAL (MAR) 01/31/2005: Momentum studies are still
bearish but are now at oversold levels and will tend to support reversal action
if it occurs. The close under the 18-day moving average indicates 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 now at
153.2. The next area of resistance is around 154.7 and 155.5, while 1st support
hits today at 153.5 and below there at 153.2.

BEANOIL (MAR) 01/31/2005: The market broke to a
new contract low. Daily stochastics declining into oversold territory suggest
the selling may be drying up soon. The major trend has turned down with the
cross over back below the 18-day moving average. The outside day down is
somewhat negative. The market is in a bearish position with the close below the
2nd swing support number. The next downside target is 19.02. The next area of
resistance is around 19.38 and 19.59, while 1st support hits today at 19.10 and
below there at 19.02.

 

WHEAT MARKET RECAP

1/28/2005

March Wheat finished up 1/2 at 290, 1 1/4 off the high and 1
3/4 up from the low. May Wheat closed unchanged at 297 1/2. This was 1 3/4 up
from the low and 1 off the high.

March wheat ended the session 5 3/4 cents lower
on the week, after trading to a new contract lower earlier in the day. The
higher close in the face of a new contract low could be construed as mildly
supportive. Some short covering helped the market earlier in the session and
probably had a hand in the higher close. Overall, the action is not really
impressive as the market never even made it to the middle of yesterday’s range.
Overnight, South Korea bought 22,100 metric tons of US No. 1 wheat. Basis bids
were mostly steady, but soft red winter wheat values have fallen recently due to
competition from Argentina. Analysts commented that the EU exporters need
subsidies of at least 11 Euros (US$15) to win back North African markets due to
competition from weak US dollar and competition from Argentina. Rain and snow
heading into the plains today and through the weekend should be beneficial to
the hard winter wheat crop, but recent freeze/thaw patterns may have damaged the
soft winter wheat crop. March wheat support comes in at 287 and 284 1/2 with
resistance at 292 1/4 and 295.

Technical Outlook

WHEAT (MAR) 01/31/2005: The market was pushed to
a new contract low. 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 target is now at
287. The next area of resistance is around 291 1/2 and 292 3/4, while 1st
support hits today at 288 1/2 and below there at 287.

 

LIVE CATTLE RECAP

1/28/2005

February Live Cattle finished up 0.52 at 89.77,
0.37 off the high and 1.07 up from the low.

March Feeder Cattle closed up 0.32 at 100.22.
This was 0.55 up from the low and 0.57 off the high.

April live cattle ended the session 23 lower on
the week, after trading to their highest level since Jan 20th earlier today.
Rain and snow moving into the plains today and early next week lent support. US
plains fed cattle traded at $89 today, $1 lower on the week. Nebraska cattle
traded 2-4 lower yesterday, but trade was very light. Boxed beef cutout values
were down $2.31 at mid-session to 143.79 as compared with 152.28 a week ago.
Estimated Federally Inspected Slaughter came in at 114,000 head versus trade
guesses ranging from 113,000 to 116,000. Saturday’s estimate is 4,000 head
versus guesses of 6,000 to 20,000. Slaughter for the week comes in at 589,000
head versus 587,000 last week and 599,000 a year ago. For this afternoon’s
Cattle Inventory report, traders were looking for all cattle and calves as of
January 1st to come in near 100.7% of last year (range 100-101). The 2004 calf
crop was expected near 99.4% of last year (range 99-100%). Resistance for April
cattle comes in at 88.42 and 88.70 with 85.17 as downside support.

Technical Outlook

CATTLE (FEB) 01/31/2005: The cross over and close
above the 40-day moving average indicates the longer-term trend has turned up.
Negative momentum studies in the neutral zone will tend to reinforce lower price
action. The market back below the 18-day moving average suggests the longer-term
trend could be turning down. A positive setup occurred with the close over the
1st swing resistance. The next downside objective is 88.170. The next area of
resistance is around 90.500 and 91.050, while 1st support hits today at 89.070
and below there at 88.170.

 

LEAN HOGS RECAP

1/28/2005

February Lean Hogs finished down 0.07 at 74.12,
0.52 off the high and 0.62 up from the low.

February Pork Bellies closed up 0.30 at 94.37.
This was 0.97 up from the low and 0.32 off the high.

April live cattle ended the session 130 lower on
the week after trading to their highest level since December 27th earlier today.
The market bounced after trading back into the Dec 28-29 gap level earlier in
the session and managed to trade higher on the day before settling back in
around unchanged. This action appeared to be technically based, as poor packer
margins and exptactions of heavy supplies ahead weighws on fundamentals. US
Midwest hogs traded steady to 50 today, pressured by lower pork prices on
Thursday. Estimated Federally Inspected Slaughter came in at 389,000 head versus
trade guesses ranging from 387,000 to 398,000. Saturday’s estimate is 30,000
versus guesses of 30,000 to 46,000. Slaughter for the week came in at 1,986,000
head versus 1,993,000 last week and 1,897,000 a year ago. April hog resistance
is at 75.80 and 77.00 with support at 74.30 and 72.60.

Technical Outlook

HOGS (FEB) 01/31/2005: The close below the 60-day
moving average is an indication the longer-term trend has turned down. Daily
stochastics are trending lower but have declined into oversold territory. The
close below the 18-day moving average is an indication the longer-term trend has
turned down. With the close higher than the pivot swing number, the market is in
a slightly bullish posture. The next downside objective is now at 72.950. The
next area of resistance is around 74.670 and 75.250, while 1st support hits
today at 73.550 and below there at 72.950.

 

COCOA MARKET RECAP

1/28/2005

March Cocoa finished down 15 at 1562, 24 off the
high and 2 up from the low.

The cocoa market apparently was in a profit
taking mode after the big declines as the market settled lower after a minimal
attempt to bounce early. We suspect that a stronger Dollar undermined the market
and with the cocoa falling back below near term chart support the bears would
seem to have a slight bit on contract. The weekly COT report after the close
showed only a minor increase in the net spec and fund long and with the market
ending the week $35 a ton above the level where the COT report was measured the
net spec and fund long is a little understated.

Technical Outlook

COCOA (MAR) 01/31/2005: The close under the
40-day moving average indicates the longer-term trend could be turning down.
Momentum studies are trending higher but have entered overbought levels. The
cross over and close above the 18-day moving average indicates the longer-term
trend has turned up. The market’s close below the pivot swing number is a mildly
negative setup. The near-term upside objective is at 1593. The next area of
resistance is around 1575 and 1593, while 1st support hits today at 1549 and
below there at 1542.

 

COFFEE MARKET RECAP

1/28/2005

March Coffee closed up 2.10 at 105.30. This was
3.80 up from the low and 0.40 off the high.

Coffee futures rebounded sharply from early
weakness supported by strong commercial buying and speculative short covering.
While German roasters have backed away from the cash market this week due to
high prices, they may not be able to stay on the sidelines much longer.
Expectations for a small coffee crop from Brazil which will likely lead to
tighter world supplies have US cash coffee buyers looking to buy more beans this
year. Despite a forecast for soaking rains in Brazil’s coffee regions, the
moisture may help fruit development, but will not increase the crop size since
the crop is past the flowering stage. Brazil government estimates the crop to be
down 17% this year vs 2004.

Technical Outlook

COFFEE (MAR) 01/31/2005: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The market now above the 18-day moving average suggests the
longer-term trend has turned up. A positive signal was given by the outside day
up. With the close over the 1st swing resistance number, the market is in a
moderately positive position. The next upside objective is 108.60. The next area
of resistance is around 107.35 and 108.60, while 1st support hits today at
103.20 and below there at 100.25.

 

SUGAR MARKET RECAP

1/28/2005

March Sugar closed down 0.07 at 9.15. This was
0.13 up from the low and 0.03 off the high.

Profit taking and roll over activity pressured
sugar futures Friday, but loses were trimmed significantly by the close. Despite
an outlook for rising sugar supplies, expectations for robust demand from India,
Pakistan, Russia and the Middle East have kept sugar in a solid uptrend. Trading
is likely to remain quite volatile as strong physical demand clashes with the
market’s overbought technical situation. High open interest in the March
contract could cause some whipsaw price action as traders roll to the May
contract. India reported they will release 1.2 million tones of sugar for sale
in the domestic market in February to ease rising internal prices. However,
despite government sales, India has been an active importer recently as the
country could be facing about a 2 million tonne lower crop this year vs last
year. Given the potential volatility in this market approaching the March
contract’s expiration, traders wanting to get long should be patient and wait
for price pullbacks or use option strategies for staying power.

Technical Outlook

SUGAR (MAR) 01/31/2005: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The cross over and close above the 18-day moving average is an
indication the longer-term trend has turned positive. It is a slightly negative
indicator that the close was under the swing pivot. The next upside target is
9.28. The next area of resistance is around 9.23 and 9.28, while 1st support
hits today at 9.07 and below there at 8.97.

 

COTTON MARKET RECAP

1/28/2005

March Cotton finished down 0.51 at 43.35, 0.90
off the high and 0.95 up from the low.

Speculative selling continued to drive cotton
sharply lower Friday as a weaker than expected export sales data this week and
concern for a large planted acreage number had fund traders booking recent
gains. The May contract’s break below key support levels leaves little in the
way of support until around 43 cents. The supply outlook is overwhelmingly
bearish, but funds had been bidding up cotton prices recently on expectations of
rising world demand.

Technical Outlook

COTTON (MAR) 01/31/2005: Momentum studies
trending lower at mid-range should accelerate a move lower if support levels are
taken out. 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 under the swing pivot. The next downside target is 41.49. The next
area of resistance is around 44.27 and 45.18, while 1st support hits today at
42.43 and below there at 41.49.