The Catalyst For Today’s Stock Rally

December corn has failed to gain ground for each
of the past 7 trading sessions. Weakness in the other grains, fears of China
exports and a more active harvest pace in the northwest cornbelt this week
helped to pressure the market with December futures at the lows just 1/4 cent
from the October 12th lows. Talk of a higher production forecast for next weeks
USDA Crop Production report was also seen as a bearish influence. Early
estimates are near the 11.5-11.8 billion bushel range from 11.613 billion last
month. Surging open interest on the break this week suggests that fund traders
are adding to their net short position. Weekly export sales came in at a
marketing year high at 1.504 million tons as compared with trade expectations at
1.0-1.3 million tons and 823,500 tons necessary each week to reach the USDA
projection. Cumulative sales have reached 31.5% of the USDA forecast for the
season as compared with 32.5% on average for this time of the year. The strong
sales led to calls for a higher opening but weakness in the other grains and a
lack of commercial support helped pressure. News that Jordan bought 100,000 tons
of feed barley from the black sea region was seen as competition for corn
exporters. Support for December corn comes in at 197 and 192 1/2 with resistance
at 199 and 201 1/2.

Technical Outlook

CORN (DEC) 11/05/2004: Momentum studies are
declining, but have fallen to oversold levels. The market’s short-term trend is
negative as the close remains below the 9-day moving average. The market setup
is somewhat negative with the close under the 1st swing support. The next
downside objective is 196. With a reading under 30, the 9-day RSI is approaching
oversold levels. The next area of resistance is around 198 1/2 and 199 3/4,
while 1st support hits today at 196 1/2 and below there at 196.

 

SOY COMPLEX RECAP

11/4/2004

January Soybeans finished down 12 1/4 at 506 1/4,
12 1/2 off the high and 3/4 up from the low. March Soybeans closed down 10 3/4
at 511 3/4. This was 1 up from the low and 11 1/4 off the high.

December Soymeal closed down 1.8 at 148.8. This
was 0.3 up from the low and 1.9 off the high.

December Soybean Oil finished down 0.65 at 19.88,
0.64 off the high and 0.06 up from the low.

Poor weekly export sales, weak prices at the
China exchange overnight and lower palm oil prices contributed to the weak price
action early in the session. Fund selling intensified into the close and the
market collapsed into new contract lows. Weekly export sales came in at just
489,300 tons as compared with trade expectations at 900,000-1.2 million tons.
Cumulative sales have reached 45.8% of the USDA forecast for the season as
compared with 47.5% on average for this time of the year. Meal sales were 23,900
tons from trade expectations at 100,000-200,000 tons. Cumulative sales have
reached 44.9% of the USDA forecast for the season as compared with 38.4% on
average for this time of the year. Oil sales were 4100 tons from 5,000-15,000
expected. There were no deliveries against the November contract and cash basis
bids were 2-6 cents higher in the country but steady to lower at the gulf.
Producer sales of the bumper crop remain light. Fears of a hefty increase in the
USDA production report for next week added to the bearish tone. January soybean
resistance comes in at 513 1/4 and 517 1/2 with support at 503 and 499 ¾.

Technical Outlook

BEANS (JAN) 11/05/2004: The market made a new
contract low on the break. 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 setup is somewhat negative with the close
under the 1st swing support. The next downside target is 496. With a reading
under 30, the 9-day RSI is approaching oversold levels. The next area of
resistance is around 512 3/4 and 522 1/4, while 1st support hits today at 499
3/4 and below there at 496.

MEAL (DEC) 11/05/2004: The market was pushed to a
new contract low. Momentum studies are declining, but have fallen to oversold
levels. The market’s close below the 9-day moving average is an indication the
short-term trend remains negative. The market setup is somewhat negative with
the close under the 1st swing support. The next downside objective is 147.0. The
9-day RSI under 30 indicates the market is approaching oversold levels. The next
area of resistance is around 149.9 and 151.4, while 1st support hits today at
147.7 and below there at 147.0.

BEANOIL (DEC) 11/05/2004: Negative momentum
studies in the neutral zone will tend to reinforce lower price action. The
market’s short-term trend is negative as the close remains below the 9-day
moving average. The close below the 2nd swing support number puts the market on
the defensive. The next downside objective is now at 19.33. The next area of
resistance is around 20.22 and 20.72, while 1st support hits today at 19.53 and
below there at 19.33.

 

WHEAT MARKET RECAP

11/4/2004

December Wheat finished up 2 3/4 at 303, 2 off the high and 5
3/4 up from the low. March Wheat closed up 2 at 316 1/4. This was 6 3/4 up from
the low and 3/4 off the high.

The outside day up and higher close after a
successful test of the contract low leaves the appearance of a double bottom.
Egypt bought 120,000 tons of US soft white wheat and 60,000 tons of wheat from
Argentina at their tender for 30,000-60,000 tons of optional origin wheat. This
news help spark the early rally as European wheat was thought to have the
advantage but a lack of follow-through buying and the emergence of more fund
selling helped push December futures to within a 1/4 cent of the October lows.
Weekly export sales came in at 388,100 tons as compared with trade expectations
at 300,000-400,000 tons and 322,700 tons necessary each week to reach the USDA
projection. Cumulative sales have reached 62.5% of the USDA forecast for the
season as compared with 51.8% on average for this time of the year. The new low
for the US dollar and the fast pace of sales could lead to a higher export
forecast in next weeks USDA supply/demand report. South Korea is tendering for
20,000 tons of US wheat. Basis was steady. The market focus is still on the
outlook for a massive world crop and the surge in open interest on the break
suggests that fund traders are building a record net short position in wheat.
December wheat support comes in at 300 1/2 and 297 with 308, 311 1/2 and 315 as
resistance.

Technical Outlook

WHEAT (DEC) 11/05/2004: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The market’s short-term trend is negative as the close
remains below the 9-day moving average. 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 downside objective is 294 1/2. The next
area of resistance is around 306 3/4 and 309 3/4, while 1st support hits today
at 299 1/4 and below there at 294 1/2.

 

LIVE CATTLE RECAP

11/4/2004

December Live Cattle closed down 1.30 at 82.82.
This was 0.50 up from the low and 1.07 off the high.

January Feeder Cattle finished down 2.17 at
102.20, 2.40 off the high and 0.77 up from the low.

Cattle collapsed after a slightly lower opening
as the move to cut-back slaughter in an attempt to support higher beef prices by
packers failed. In fact, beef prices collapsed further and are down near $9.00
in the past week. Funds were active sellers and the selling intensified on the
move under Wednesday’s lows. Boxed-beef prices were down $1.94 to $132.24 at
mid-session as compared with $141.23 last week at this time. Slaughter came in
at just 120,000 head as compared with trade expectations at 123,000-128,000.
With near record weights, traders are uncomfortable with the slower slaughter
pace.

Technical Outlook

CATTLE (DEC) 11/05/2004: 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. The market setup is somewhat negative with the close under the 1st swing
support. The next downside target is 81.400. With a reading under 30, the 9-day
RSI is approaching oversold levels. The next area of resistance is around 83.600
and 84.520, while 1st support hits today at 82.050 and below there at 81.400.

 

LEAN HOGS RECAP

11/4/2004

December Lean Hogs closed up 2.00 at 73.85. This
was 1.35 up from the low and equal to the high.

February Pork Bellies finished up 2.85 at 102.50,
equal to the high and 2.60 up from the low.

December Hogs closed limit-up for the second
session in a row and all contracts moved to new contract highs as higher cash
prices and ideas that exports have remained strong during a period of slightly
lower slaughter helped to drive the market higher. It appears there are traders
caught short the nearby contract looking for a weak cash trend but the market
continues to push higher. The CME 2-Day Lean Index for the period ending
November 2nd was reported at 71.91, up 53 cents from the previous session and up
from 70.58 the previous week. Bulls were impressed with a record volume reported
on Wednesday’s upside breakout. Slaughter came in at 400,000 head as compared
with trade expectations of 397,000-400,000 head.

Technical Outlook

HOGS (DEC) 11/05/2004: The market made a new
contract high on the rally. Rising stochastics at overbought levels warrant some
caution for bulls. The market’s short-term trend is positive on the close above
the 9-day moving average. If yesterday’s gap higher on the day session chart
holds, additional buying could develop this session. There could be more upside
follow through since the market closed above the 2nd swing resistance. The next
upside target is 74.850. The 9-day RSI over 70 indicates the market is
approaching overbought levels. The next area of resistance is around 74.520 and
74.850, while 1st support hits today at 73.200 and below there at 72.170.

 

COCOA MARKET RECAP

11/4/2004

December Cocoa finished up 108 at 1568, 2 off the
high and 50 up from the low.

The cocoa market exploded Thursday morning after
early reports that the Ivory Coast government had actually “bombed” rebel
positions in the north. The rebels responded that they were once again at war
with the government and the French confirmed that the attacks took place.
Therefore, the entire complexion of the cocoa market has changed and because of
the new threat to supply both commercial and fund buyers rushed into the fray.
With reports that the Ivory Coast government had repeatedly bombed the rebels,
it wouldn’t seem like a simple mistake was made. Therefore, unless the Ivory
Coast government was provoked, it is possible that the UN and the French will
come down on the side of the rebels and that could be a sign of a serious
problem.

Technical Outlook

COCOA (DEC) 11/05/2004: The crossover up in the
daily stochastics is a bullish signal. Momentum studies are trending higher but
have entered overbought levels. A positive signal for trend short-term was given
on a close over the 9-bar moving average. Follow through buying looks likely if
the market can hold yesterday’s gap on the day session chart. The market’s close
above the 2nd swing resistance number is a bullish indication. The next upside
objective is 1608. The 9-day RSI over 70 indicates the market is approaching
overbought levels. The next area of resistance is around 1594 and 1608, while
1st support hits today at 1542 and below there at 1504.

 

COFFEE MARKET RECAP

11/4/2004

December Coffee closed up 0.75 at 77.90. This was
1.10 up from the low and 0.70 off the high.

March coffee closed higher for the third session
in a row with fund traders noted as buyers and commercial traders were
noticeably absent. There is still talk of a potential smaller crop for Brazil
for the 2005/2006 season with estimates near 33-35 million bags from near 42
million bags this year. There is also still discussion of the lower quality of
the current crop. Brazil analysts Safras e Mercado indicated that producers have
sold 52% of the 2004/2005 crop as of October 31st as compared with 56% sold for
the same period last year.

Technical Outlook

COFFEE (DEC) 11/05/2004: The cross over and close
above the 40-day moving average is an indication the longer-term trend has
turned positive. Momentum studies are rising from mid-range, which could
accelerate a move higher if resistance levels are penetrated. The market’s
short-term trend is positive on the close above the 9-day moving average. With
the close higher than the pivot swing number, the market is in a slightly
bullish posture. The near-term upside target is at 79.60. The next area of
resistance is around 78.80 and 79.60, while 1st support hits today at 77.05 and
below there at 76.05.

 

SUGAR MARKET RECAP

11/4/2004

March Sugar closed up 0.08 at 8.43. This was 0.05
up from the low and 0.03 off the high.

Sugar closed slightly higher with a lack of new
cash news keeping the trade quiet. Local and small spec buying helped support
the minor gains. High freight rates and a lack of new cash market news,
especially from India has kept the market in a long liquidation mode since the
October 12th highs. Russia will cut the raw sugar import tariff to $164/tonne in
December from $180 in November. The ministry adjusts the tariff each month
choosing from nine rates between $140 and $270 per tonne. Russia raw sugar
imports for the first 8 months of the year have reached just 1.91 million tons
from 3.12 million tons the previous year. The line-up of ships to load sugar
vessels in Brazil declined slightly since last week.

Technical Outlook

SUGAR (MAR) 11/05/2004: Daily stochastics are
trending lower but have declined into oversold territory. The market’s
short-term trend is negative as the close remains below the 9-day moving
average. The market has a slightly positive tilt with the close over the swing
pivot. The next downside target is now at 8.35. The next area of resistance is
around 8.47 and 8.50, while 1st support hits today at 8.39 and below there at
8.35.

 

COTTON MARKET RECAP

11/4/2004

December Cotton finished down 1.21 at 43.37, 1.21
off the high and 0.27 up from the low.

December cotton closed 121 lower on the session
and the close was the lowest close for the life-of-contract. Improving weather
for harvest and fears of continued weakness in world prices helped to keep the
trend weak. Weekly export sales came in at 91,500 bales as compared with trade
expectations at 100,000 t0 150,000 bales. Export shipments were just 91,500
bales vs. expectations at 90,000-125,000 bales. While step 2 payments might
boost exports for next weeks report, traders were disappointed with the poor
showing of the past two weeks.

Technical Outlook

COTTON (DEC) 11/05/2004: Daily stochastics are
trending lower but have declined into oversold territory. The market’s close
below the 9-day moving average is an indication the short-term trend remains
negative. The defensive setup, with the close under the 2nd swing support, could
cause some early weakness. The next downside objective is now at 42.13. The next
area of resistance is around 44.11 and 45.08, while 1st support hits today at
42.63 and below there at 42.13.