Stock Market Impressive, Considering This Statement…

The market matched contract lows from Friday for
December corn before closing back into the range of the past 8 trading sessions.
While the weather outlook remains as a bearish factor, the oversold condition of
the market and a perception that the USDA yield outlook may not be as high as
current trade expectations helped to provide some support. RSI readings hit a
low on July 22nd and the “higher low” on Friday (divergence) could be a sign of
a loss in downside momentum. Most traditional technical indicators are in an
oversold condition and the Commitment-of-Traders report with options showed that
(as of July 27th) speculators were holding a net short position of over 86,000
contracts. The weekly crop progress report, released this afternoon, is expected
to show a 1% improvement in crops rated in good to excellent condition with last
weeks reading at 77%. Weekly export inspections came in at 32.7 million bushels
as compared with trade expectations at 28-33 million bushels. Cumulative
shipments have reached 1.68 billion bushels as compared with 1.365 billion
bushels last year by this date. Support for December corn comes in at 226 3/4
and 225 1/2 with 231 1/2 and 233 3/4 as resistance.

Technical Outlook

#CORN (DEC) 08/03/04: Daily stochastics are
trending lower, but have declined into oversold territory. The next downside
objective is now at 223 3/4. The market’s close above the 2nd swing resistance
number is a bullish indication. Market resistance comes in at 230 3/4 today,
with support at 223 3/4. The market’s short-term trend is negative as the close
remains below the 9-day moving average. With a reading under 30, the 9-day RSI
is approaching oversold levels.

 

SOY COMPLEX RECAP

8/2/2004

August Soybeans finished down 1 1/2 at 598, 8 off
the high and 15 up from the low. November Soybeans closed down 3 at 566. This
was 8 up from the low and 10 off the high.

August Soymeal closed down 5.2 at 192.8. This was
0.8 up from the low and 5.4 off the high.

August Soybean Oil finished down 0.26 at 21.74,
0.26 off the high and 0.04 up from the low.

The bounce off of the lows was 18 cents but the
lower close and close below the opening keeps the overall trend down. The
weather forecasters took heat out of the Midwest for later this week which
helped to encourage more selling in new crop soybeans while weakness in the cash
market and continued bear spreading in meal helped to pressure the nearby meal
futures in spite of a lack of deliveries. There were no deliveries for meal or
soybeans and just 63 lots for oil. Oil registrations with the CBOT were down to
3653 lots from 3770 the previous session. Meal basis was also weak which is
discouraging processors from buying old crop soybeans when new crop will be
available in a few weeks. Soybean processors dropped bids by 10-30 cents. Weekly
export inspections came in at 3.09 million bushels as compared with trade
expectations at 1-3 million bushels. Cumulative shipments have reached 842.1
million bushels as compared with 1.023 billion bushels last year by this date.
Weakness in China futures overnight added to the bearish tone. The weekly crop
progress report, released this afternoon, is expected to show a 1% improvement
in crops rated in good to excellent condition from 69% last week. November
soybean support comes in at 567 and 558 with 579 and 586 as resistance.

Technical Outlook

#SOYBEANS (NOV) 08/03/04: It is a slightly
negative indicator that the close was lower than the pivot swing number. The
next area of resistance is around 575 and 584 1/2, while 1st support hits today
at 557 and below there at 548 1/2. The market’s close below the 9-day moving
average is an indication the short-term trend remains negative. Momentum studies
are declining, but have fallen to oversold levels. The next downside target is
548 1/2. The 9-day RSI under 30 indicates the market is approaching oversold
levels.

MEAL (DEC): Daily stochastics are trending lower,
but have declined into oversold territory. The next downside objective is now at
170.3. First resistance comes in at 176.2, with support at 171.7. The market’s
short-term trend is negative as the close remains below the 9-day moving
average. The market’s close below the pivot swing number is a mildly negative
setup. With a reading under 30, the 9-day RSI is approaching oversold levels.

BEAN OIL (DEC): The market’s close below the
9-day moving average is an indication the short-term trend remains negative.
Momentum studies are declining, but have fallen to oversold levels. The next
downside target is 19.92. With the close higher than the pivot swing number, the
market is in a slightly bullish posture. The daily closing price reversal up is
positive. Daily swing resistance is found at 21.29 and above there at 21.66.
Support should be encountered at 20.42 and 19.92. The 9-day RSI under 30
indicates the market is approaching oversold levels.

 

WHEAT MARKET RECAP

8/2/2004

September Wheat finished up 4 3/4 at 317, 1 1/2 off the high
and 8 up from the low. December Wheat closed up 5 1/4 at 330 3/4. This was 8 1/2
up from the low and 3/4 off the high.

The higher close after a new contract low is a
technical signal that a significant low may be in place. This could attract some
technical buying as nearby futures experienced a key reversal. Funds were noted
buyers of at least 1000 contracts by mid-session. The jump in tender business
combined with the oversold condition of the market sparked some buying interest
after the market moved to new contract lows. Weekly export inspections came in
at 24.4 million bushels as compared with trade expectations at 19-24 million
bushels. China shipped 89,250 tons of wheat last week. Cumulative shipments have
reached 163.6 million bushels as compared with 148.9 million bushels last year
by this date. South Korea is tendering for 38,600 tons of US wheat while
Pakistan and Jordon are tendering for higher quantities of wheat on the world
market. Pakistan rejected offers on 500,000 tons and Egypt did not tender over
the weekend which kept the tone negative but the increased interest might
provide for some additional short-covering support. Support for September wheat
moves up to 315 1/2 and 310 with 325 1/4 and 330 1/4 as resistance.

Technical Outlook

#WHEAT (DEC) 08/03/04: The outside day up and
close above the previous day’s high is a positive signal. The daily closing
price reversal up is positive. A positive setup occurred with the close over the
1st swing resistance. Look for near-term support at 326 and below there at 319
1/2, with resistance levels at 335 1/4 and 338. The market’s close below the
9-day moving average is an indication the short-term trend remains negative. The
daily stochastics have crossed over up which is a bullish indication. The next
upside target is 338.

 

LIVE CATTLE RECAP

8/2/2004

October Live Cattle closed down 0.25 at 88.50.
This was 0.35 up from the low and 0.40 off the high.

October Feeder Cattle finished up 0.75 at 112.85,
0.05 off the high and 1.75 up from the low.

The market pushed moderately lower on the session
and experienced follow-through technical selling from last week’s weekly
reversal. Traders expect weaker cash markets this week and packers do not seem
willing to drive profit-margins down after suffering red ink from several weeks
before moving into the black last week. Boxed-beef cut-out values were down $.34
to $141.58 at mid-session as compared with $139.34 last week at this time. Some
packers have cut-back on kills. Slaughter came in at 123,000 head as compared
with 122,000-130,000 head expected.

Technical Outlook

#CATTLE (OCT) 08/03/04: Negative momentum studies
in the neutral zone will tend to reinforce lower price action. The next downside
target is 87.77. It is a slightly negative indicator that the close was lower
than the pivot swing number. Support should be encountered at 88.12 and below
there at 87.77. Market resistance is at 88.87 and then again at 89.27. The
downside closing price reversal on the daily chart is somewhat negative. The
market’s close below the 9-day moving average is an indication the short-term
trend remains negative.

 

LEAN HOGS RECAP

8/2/2004

October Lean Hogs closed up 1.12 at 70.35. This
was 1.10 up from the low and 0.40 off the high.

February Pork Bellies finished up 0.85 at 93.80,
2.15 off the high and 1.75 up from the low.

October hogs pushed to new contract highs on
active fund and speculative buying. The higher pork cut-out value from late last
week helped to support improved packer profit margins and improving cash prices
along with a small jump in the 2-Day lean Index helped to support. A lack of
commercial selling pressures due to the stiff discount of futures to cash added
to the positive tone. Slaughter was 335,000 head as compared with trade
expectations at 320,000 to 340,000 head. The 2-day lean index was up 28 cents to
79.32 as compared with 78.98 one week previous.

Technical Outlook

#HOGS (OCT) 08/03/04: With the close over the 1st
swing resistance number, the market is in a moderately positive position.
Resistance levels comes in at 71.10 and 71.67 today, while support is around
69.60 and then 68.67. The rally brought the market to a new contract high. The
market’s short-term trend is positive on a close above the 9-day moving average.
Momentum studies are trending higher, but have entered overbought levels. The
near-term upside objective is at 71.67. With a reading over 70, the 9-day RSI is
approaching overbought levels.

 

COCOA MARKET RECAP

8/2/2004

September Cocoa finished up 47 at 1692, 13 off
the high and 23 up from the low.

The cocoa market managed yet another surprising
rally as the speculative crowd is simply unafraid of paying up at progressively
higher prices. While many concede the threat of dryness few are willing to
forecast the impact on the upcoming main crop harvest but that hasn’t
discouraged the funds and small specs from consistently piling into the long
side. Some suggest that the lower Dollar is providing a lift to prices but
without the Dollar taking out the Friday lows cocoa in the US isn’t even as
cheap as it was last Friday due to the flat price rise. In conclusion, most
players are simply shocked at the performance in the cocoa market.

Technical Outlook

COCOA (SEP) 08/03/04 The gap upmove on the day
session chart is a bullish indicator for trend. The market has a bullish tilt
coming into today’s trade with the close above the 2nd swing resistance. Cocoa
should run into resistance at 1710 and above there at 1726 with support at 1674
and 1654. The 9-day RSI over 70 indicates the market is approaching overbought
levels. The daily stochastics have crossed over up which is a bullish
indication. The next upside target is 1725.50.

 

COFFEE MARKET RECAP

8/2/2004

September Coffee closed unchanged at 66.45. This
was 0.75 up from the low and 0.15 off the high.

September coffee seemed to be poised to drive to
even lower levels Monday but in the end rejected the move to new lows.
Apparently small specs were forced from the market early but some players think
that light roaster or commercial buying picked up the market. With the last COT
report showing the small specs and fund combined position still net long it is
not surprising that the market continues to see long liquidation. Apparently
weather in Brazil is mostly non threatening but at the same time short term
technical indicators in coffee have reached excessively overdone levels.

Technical Outlook

COFFEE (SEP) 8/3/04 The market tilt is slightly
negative with the close under the pivot. The 9-day RSI under 30 indicates the
market is approaching oversold levels. Momentum studies are declining, but have
fallen to oversold levels. The next downside objective is now at 65.40. The
Coffee contract should run into resistance at 66.90 and above there at 67.20
with support at 66 and 65.40. The market’s short-term trend is negative as the
close remains below the 9-day moving average.

 

SUGAR MARKET RECAP

8/2/2004

October Sugar closed up 0.11 at 8.39. This was
0.19 up from the low and 0.02 off the high.

Since October sugar closed at another new all
time high close, that probably puts the net spec and fund long in sugar at a
record high. With some players pegging the net spec and fund long position to be
157,000 contracts there is little doubt that the market is heavily overbought.
Reports that Brazilian Cane sugar harvest figures were thought to have dropped
by 12.4% into July 16th seems to hint at lower production but most players still
expect the ending production number to rise 5.7%. It should also be noted the
French 2004-2005 sugar output was expected to decline by 4.28%. In other words,
reduced production concerns in some ways might offset the potentially negative
impact of the July Russian sugar import decline! Brazil also reported a sharp
decline in its 2004-2005 ethanol production and that could make forward supply
conditions for ethanol tight and that in turn could keep demand strong for sugar
ethanol in the Brazilian energy equation.

Technical Outlook

#SUGAR (OCT) 08/03/04: The rally brought the
market to a new contract high. With the close over the 1st swing resistance
number, the market is in a moderately positive position. Swing resistance comes
in at 8.56, with support found at 8.14. The market’s short-term trend is
positive on a close above the 9-day moving average. Momentum studies are
trending higher, but have entered overbought levels. The near-term upside
objective is at 8.56. Consider buying pull-backs since daily studies are
bullish.

 

COTTON MARKET RECAP

8/2/2004

October Cotton finished up 0.47 at 44.30, 0.30
off the high and 0.55 up from the low.

December cotton managed to reject the lower price
action posted late last week but few players are suggesting that the bounce is
anything but short covering. In order for cotton to reach a record spec short
position the combined fund and small spec short position needs to see another
10,000 contracts sold. Weather conditions for US cotton continue to be negative,
while the market is possibly seeing some weather support from India but so far
the market thinks Indian cotton is doing well. Therefore, for the drought threat
in India to impact cotton prices there will have to be a worsening of
conditions.

Technical Outlook

#COTTON (OCT) 08/03/04: The market’s close below
the 9-day moving average is an indication the short-term trend remains negative.
A positive setup occurred with the close over the 1st swing resistance. Next
resistance area comes in at 44.73 and then again at 45.09, while support is
targeted at 43.88 and 43.39. Momentum studies are declining, but have fallen to
oversold levels. The next downside target is 43.39.