Renewed Buying Interest In Copper–Here’s Why

While fund traders were on both sides of the
market, commercial hedging pressures helped trigger a downside correction for
much of the day as the market is trying to absorb increased producer selling
into the cash market on the surge higher in prices yesterday. Ideas that the
market will set-back after the surge in fund buying yesterday helped trigger
long liquidation selling early in the session and commercial selling was also
active. The weekly crop reports failed to offer surprises for the bulls or the
bears. While 95% of the crop is planted vs. 88% on average, only 66% of the crop
has emerged as compared with 66% on average for this time of the year. Only 63%
of the crop is rated in good to excellent condition from 71% last year and 69%
as the 15-year average for this time of the year. The weather outlook is not
warm enough nor dry enough for the bulls but also not wet enough for the bears
which helped keep trade choppy early in the session. A cool forecast is expected
to keep moisture needs low for the drier areas of the eastern cornbelt. July
corn support comes in at 219 and 216 with 224 1/2 and 230 1/4 as next
resistance.

Technical Outlook

CORN (JUL) 05/25/2005: Momentum studies are
trending higher but have entered overbought levels. The major trend could be
turning up with the close back above the 18-day moving average. The market setup
is somewhat negative with the close under the 1st swing support. The near-term
upside objective is at 226. The next area of resistance is around 223 1/4 and
226, while 1st support hits today at 219 1/4 and below there at 217 3/4.

 

SOY COMPLEX RECAP

5/24/2005

July Soybeans finished up 5 1/2 at 645 1/2, 1/2
off the high and 8 1/2 up from the low. November Soybeans closed up 8 at 646.
This was 11 1/4 up from the low and 1/2 off the high.

July Soymeal closed up 1.1 at 198.7. This was 2.5
up from the low and 0.1 off the high.

July Soybean Oil finished up 0.19 at 22.87, 0.1
off the high and 0.27 up from the low.

A cool and relatively dry forecast for the
western cornbelt (1/2 inch of rain this week) and a cool and mostly dry forecast
for the eastern cornbelt (less than 1/4 inch) for the next 5-6 days helped keep
the trade choppy this morning as the bears see drier weather helping to promote
increased planting progress and the bulls see dry weather as a developing
problem for the eastern cornbelt. The longer-term models show some increase in
moisture at the end of the 10-day outlook which was seen as bearish development
but the reliability of longer-term forecasts are in question. Talk that funds
could return as buyers today helped provide underlying support after a flurry of
fund buying supported grain markets yesterday. As of Sunday, 65% of the US crop
had been planted vs. a 5-year average of 56% but only 27% had emerged vs. a
5-year average of 28%. The market managed to hold support under yesterday’s lows
and the strong close is seen as a positive technical action. July soybean
support comes in at 638 1/2 with 650 and 661 3/4 as resistance.

Technical Outlook

BEANS (JUL) 05/25/2005: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The major trend could be turning up with the close back above the 18-day
moving average. The upside closing price reversal on the daily chart is somewhat
bullish. The close over the pivot swing is a somewhat positive setup. The
near-term upside objective is at 652 1/2. The next area of resistance is around
650 and 652 1/2, while 1st support hits today at 641 and below there at 634 1/2.

MEAL (JUL) 05/25/2005: Rising stochastics at
overbought levels warrant some caution for bulls. The cross over and close above
the 18-day moving average indicates the longer-term trend has turned up. The
upside closing price reversal on the daily chart is somewhat bullish. The market
has a slightly positive tilt with the close over the swing pivot. The next
upside target is 200.7. The next area of resistance is around 200.0 and 200.7,
while 1st support hits today at 197.4 and below there at 195.5.

BEANOIL (JUL) 05/25/2005: 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 cross over and close above
the 18-day moving average is an indication the longer-term trend has turned
positive. The daily closing price reversal up is a positive indicator that could
support higher prices. With the close higher than the pivot swing number, the
market is in a slightly bullish posture. The near-term upside objective is at
23.19. The next area of resistance is around 23.05 and 23.19, while 1st support
hits today at 22.69 and below there at 22.46.

 

WHEAT MARKET RECAP

5/24/2005

July Wheat finished down 1 3/4 at 332, 1 1/2 off the high and
2 3/4 up from the low. December Wheat closed down 3/4 at 351 1/2. This was 3 up
from the low and 1 off the high.

The market managed to consolidate most of
yesterday’s gains with some early weakness but the selling was not enough to see
significant losses and minor support managed to hold. Overnight thunderstorms in
Kansas and Oklahoma with more rain in the forecast for Kansas and Nebraska today
helped to pressure the market as the rains, and cooler temperatures are expected
to ease the stress on the winter wheat crop. In addition, the first crop
conditions report of the year for the spring wheat showed crop conditions at 74%
good to excellent from 59% last year and 71% as the 15-year average for this
time of the year. Winter wheat crop conditions continued to deteriorate for the
week ending Sunday with 52% of the crop in good to excellent condition from 55%
last week. A continued dry outlook for the dry areas of Australia helped provide
some underlying support. In addition, the possibility that funds return to buy
the market similar to yesterday also provided underlying support. July wheat
support comes in at 328 1/2 and 324 3/4 with 332 1/2 and 339 as next resistance.

Technical Outlook

WHEAT (JUL) 05/25/2005: Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The market now
above the 18-day moving average suggests the longer-term trend has turned up.
With the close higher than the pivot swing number, the market is in a slightly
bullish posture. The next upside objective is 335 3/4. The next area of
resistance is around 334 and 335 3/4, while 1st support hits today at 330 and
below there at 327 1/2.

 

LIVE CATTLE RECAP

5/24/2005

June Live Cattle finished down 0.15 at 84.45,
0.45 off the high and 0.05 up from the low.

May Feeder Cattle closed up 0.10 at 111.32. This
was 0.22 up from the low and 0.07 off the high.

The cattle market close mixed with June lower and
August cattle up 20 on the day. The higher close after hitting the lowest level
since mid-April could attract some technical buying support. The 5-day, 330
point break off of last weeks contract high has left the market in a short-term
oversold condition. However, the huge net long position of the fund trader has
the market vulnerable to a further long liquidation sell off if support levels
are violated. At mid-session, boxed beef cutout values were up $.10 on the day
to $155.78 as compared with $155.81 one week ago. Slaughter came in at 124,000
head as compared with trade expectations of 120,000-125,000 head.

Technical Outlook

CATTLE (JUN) 05/25/2005: 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 under the swing pivot. The next downside
target is now at 84.070. The next area of resistance is around 84.700 and
85.050, while 1st support hits today at 84.220 and below there at 84.070.

 

LEAN HOGS RECAP

5/24/2005

June Lean Hogs finished up 0.35 at 71.95, 0.15
off the high and 0.65 up from the low.

May Pork Bellies closed down 2.50 at 74.50. This
was 0.05 up from the low and 1.50 off the high.

July Hogs closed 1 tick lower on the session and
down 72 from the highs of the day as the June futures managed to hold onto the
gains but the other 2005 contracts closed moderately lower. The sharp break in
pork product prices this week led to lower cash bids from packers. Cash hogs at
Peoria were down $2.00. The sharp increase in pork stocks in cold storage from
the Monthly Cold Storage report helped pressure. For the weekly cold storage
report, released after the close, traders are looking for stocks to decrease
from 200,000 pounds to 2.0 million pounds as compared with an increase in stocks
of 757,000 pounds last week and from a decrease in stocks of 2.128 million
pounds last year at this time. The CME 2-Day Lean Index for the period ending
May 20th came in at 76.14 which was down.14 from the previous session and down
from 76.69 one week ago. Slaughter came in at 383,000 head as compared with
trade expectations of 382,000-385,000 head.

Technical Outlook

HOGS (JUN) 05/25/2005: 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. The upside daily
closing price reversal gives the market a bullish tilt. The close over the pivot
swing is a somewhat positive setup. The next downside target is now at 71.020.
With a reading under 30, the 9-day RSI is approaching oversold levels. The next
area of resistance is around 72.350 and 72.620, while 1st support hits today at
71.570 and below there at 71.020.

 

COCOA MARKET RECAP

5/24/2005

July Cocoa finished down 23 at 1436, 32 off the
high and 2 up from the low.

July cocoa came under heavy speculative selling
as buying interest dried up on a push over $1,463. The market was pushed back to
near the recent consolidation lows and a lack of Fund buying interest likely
puts the market in danger of taking out the May low at $1,417. Reports that
Ivory Coast police and soldiers located roadblocks are shaking down grower for
money who are trying to bring crop to port is causing arrival delays had little
impact on futures suggesting the marketplace remains well supplied.

Technical Outlook

COCOA (JUL) 05/25/2005: Rising from oversold
levels, daily momentum studies would support higher prices, especially on a
close above resistance. The close below the 18-day moving average is an
indication the longer-term trend has turned down. The outside day down is a
negative signal. The close below the 2nd swing support number puts the market on
the defensive. The near-term upside objective is at 1477. The next area of
resistance is around 1453 and 1477, while 1st support hits today at 1419 and
below there at 1410.

 

COFFEE MARKET RECAP

5/24/2005

July Coffee closed up 1.50 at 119.65. This was
0.90 up from the low and 2.15 off the high.

September coffee closed 155 higher on the session
but 205 points off of the highs of the day. After hitting a 7 session peak on a
flurry of speculative buying, the buying slowed and the market drifted back into
the recent trading range. A shift to cooler weather in Brazil may have provided
some underlying support but the market has seen significant long liquidation
selling from the speculator in recent weeks. July coffee in London surged higher
to a new 5 1/2 year high as a lack of producer selling has kept the cash market
tight and there is still concern for a smaller Vietnam crop for the 2005/2006
season.

Technical Outlook

COFFEE (JUL) 05/25/2005: A bullish signal was
given with an upside crossover of the daily stochastics. The stochastics
indicators are rising from oversold levels, which is bullish and should support
higher prices. The market back below the 18-day moving average suggests the
longer-term trend could be turning down. The market has a slightly positive tilt
with the close over the swing pivot. The next upside objective is 123.00. The
next area of resistance is around 121.15 and 123.00, while 1st support hits
today at 118.15 and below there at 116.95.

 

SUGAR MARKET RECAP

5/24/2005

July Sugar closed down 0.06 at 8.62. This was
0.05 up from the low and 0.04 off the high.

October sugar closed 6 lower in quiet trade as
the market attempted to consolidate the sharp gains of the past 3 days but a
lack of commercial trade interest helped keep the tone slightly bearish. Ideas
that the cash market activity dried up quickly on the jump in prices was seen as
a negative development but it may be too early to say if buyers have backed
away. Funds were noted as net short ahead of the rally of the past week and the
market is waiting for any indications if funds are entering new long positions
or if the fund buying of the past week was mostly short-covering. On the rally
yesterday, open interest was up 1152 contracts to 361,512.

Technical Outlook

SUGAR (JUL) 05/25/2005: Rising stochastics at
overbought levels warrant some caution for bulls. 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 objective is at 8.70. The next area of
resistance is around 8.66 and 8.70, while 1st support hits today at 8.58 and
below there at 8.53.

 

COTTON MARKET RECAP

5/24/2005

July Cotton finished down 0.19 at 50.08, 0.82 off
the high and 0.47 up from the low.

December cotton closed slightly higher in choppy,
two-sided trade. Support at the 52.50 level held for the 5th time in the past 6
trading sessions. After a 3 week break of active long liquidation and declining
open interest, the market seems to be trying to establish support near the 52.20
level which is close to the 50% retracement level of the December to May rally.
Ideas that China demand has been slow and concerns with hefty ending stocks for
the old crop season has helped support. Once the focus shifts to the new crop
season, the outlook for a surge in demand from China for the coming season
should soon allow for a resumption of the uptrend.

Technical Outlook

COTTON (JUL) 05/25/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
close below the 18-day moving average is an indication the longer-term trend has
turned down. The market tilt is slightly negative with the close under the
pivot. The next downside target is now at 48.88. The 9-day RSI under 30
indicates the market is approaching oversold levels. The next area of resistance
is around 50.72 and 51.45, while 1st support hits today at 49.44 and below there
at 48.88.