The Trend On This Contract Has Turned Down

Ideal weather for the weekend and for most of
next week for an active harvest triggered further weakness in the corn market
with December futures moving to a new contract low for the 11th session in a
row. Funds were noted sellers of near 1500 contracts by mid-session. Large LDP
payments have been offered across Midwest locations which has increased interest
in moving corn onto the cash market and may be a contributing factor to the
weakening basis trend this week. December corn was down 10 cents for the week.
Export news is quiet and the trade focus is on supply fundamentals as the second
week in a row of hefty export sales, released yesterday, failed to provide much
support. The market is extremely oversold but still shows no sign of a near-term
low. The next support points for December corn come in at 204 1/2 and 200 1/2
with 207 1/2 and 210 1/2 as resistance.

Technical Outlook

CORN (DEC) 09/27/2004: The sell-off took the
market to a new contract low. 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 close below the 1st swing
support could weigh on the market. The next downside target is 203 1/4. Selling
may soon dry up since the RSI is under 20 indicating the market is extremely
oversold. The next area of resistance is around 206 1/2 and 208 1/4, while 1st
support hits today at 204 and below there at 203 1/4.

 

SOY COMPLEX RECAP

9/24/2004

November Soybeans finished down 14 1/4 at 523
1/2, 11 1/2 off the high and 1/2 up from the low. January Soybeans closed down
14 1/4 at 531 1/4. This was 1/4 up from the low and 11 3/4 off the high.

December Soymeal closed down 2.8 at 159.3. This
was 0.1 up from the low and 2.2 off the high.

December Soybean Oil finished down 0.83 at 20.68,
0.7 off the high and 0.03 up from the low.

With wide open harvest weather, the market
continues to get hit with selling pressures and moved to new 1-year low.
Expectations for active harvest weather to continue through the weekend and for
most of next week helped to pressure the market. The sharp rise in open interest
in the past few weeks could indicate that fund traders are adding to a net short
position and the traders reports, released Friday afternoon, will give traders a
better feel for the extent of the net short. The good weather and weak technical
action has kept buyers on the sidelines. November soybeans closed 29 1/2 cents
lower on the week with December Soyoil down 1.21 cents and December Meal down
$6.1 for the week. Talk from Asian cash markets that China buyers are slow and
hesitant to book soybeans with a large China harvest just ahead added to the
bearish tone. A lack of new news on the demand front and the outlook for
continued above normal temperatures with little rain for the Midwest has helped
intensify the bearish psychology. Palm oil was lower overnight and meal prices
drifted lower in Europe. Brazil plantings may be delayed as producers await good
moisture in some areas and the forecast looks dry into early October. Resistance
for November soybeans comes in near 535 and 542 with next support at 523 and 513
3/4.

Technical Outlook

BEANS (NOV) 09/27/2004: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
market’s close below the 9-day moving average is an indication the short-term
trend remains negative. The close below the 2nd swing support number puts the
market on the defensive. The next downside objective is 514 1/4. Selling may
soon dry up since the RSI is under 20 indicating the market is extremely
oversold. The next area of resistance is around 529 1/2 and 538 1/4, while 1st
support hits today at 517 1/2 and below there at 514 1/4.

MEAL (DEC) 09/27/2004: 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 is
in a bearish position with the close below the 2nd swing support number. The
next downside objective is now at 157.6. With a reading under 30, the 9-day RSI
is approaching oversold levels. The next area of resistance is around 160.4 and
162.1, while 1st support hits today at 158.2 and below there at 157.6.

BEANOIL (DEC) 09/27/2004: 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. The gap lower price action
on the day session chart is a bearish indicator for trend. The close below the
2nd swing support number puts the market on the defensive. The next downside
target is 20.12. The market is approaching oversold levels on an RSI reading
under 30. The next area of resistance is around 21.04 and 21.57, while 1st
support hits today at 20.32 and below there at 20.12.

 

WHEAT MARKET RECAP

9/24/2004

December Wheat finished down 3 1/2 at 321 3/4, 5 3/4 off the
high and 3/4 up from the low. March Wheat closed down 2 1/2 at 334. This was 1
1/2 up from the low and 4 off the high.

Weakness in the other grain markets and weak
technical action helped pressure wheat prices and news that favorable harvest
weather is set into next week for the Canadian Prairies helped to drive futures
lower. December wheat closed 11 1/2 cents lower on the week. While the market
bounced from news of more active demand from Egypt, the weakness in the other
grains and several inches of rain across western Kansas this week has helped
fuel a more bearish sentiment on the floor. The market, however, has remained in
an inside trading session. Egypt bought 540,000 tons of wheat overnight with
120,000 each from the US and Australia, 240,000 from Argentina and 60,000 tons
from France. Japan bought 130,000 tons at their weekly tender with 65,000 coming
from the US. New lows in corn added to the bearish tone. Support for December
wheat comes in at 321 1/4 and 315 1/2 with resistance at 325 1/4 and 329.

Technical Outlook

WHEAT (DEC) 09/27/2004: Momentum studies trending
lower at mid-range should accelerate a move lower if support levels are taken
out. The market’s short-term trend is negative as the close remains below the
9-day moving average. It is a slightly negative indicator that the close was
lower than the pivot swing number. The next downside objective is 316 1/2. The
next area of resistance is around 325 and 329 1/2, while 1st support hits today
at 318 1/2 and below there at 316 1/2.

 

LIVE CATTLE RECAP

9/24/2004

December Live Cattle closed down 0.50 at 86.97.
This was 0.45 up from the low and 0.47 off the high.

November Feeder Cattle finished down 0.55 at
110.90, 0.55 off the high and 0.20 up from the low.

The cattle market moved lower with a weak tone in
the beef market and concerns with heavy weights and their impact on beef
production helping to pressure the market. The packer-induced slowdown in
slaughter this week also raised concerns that market-ready cattle could back-up
on feedlots and add to the tonnage down the road. A lack of new news from the
Japan/US negotiations and long liquidation selling from speculators added to the
bearish tone. Boxed-beef cutout values (600-750 choice) were down $.50 on the
day at mid-session to $137.31 as compared with $135.01 last week at this time.
The weaker beef price could push packer profit margins deeper into the red which
might slow demand further.

Technical Outlook

CATTLE (DEC) 09/27/2004: Negative momentum
studies in the neutral zone will tend to reinforce lower price action. The
market’s close below the 9-day moving average is an indication the short-term
trend remains negative. The swing indicator gave a moderately negative reading
with the close below the 1st support number. The next downside objective is now
at 86.070. The next area of resistance is around 87.420 and 87.900, while 1st
support hits today at 86.520 and below there at 86.070.

 

LEAN HOGS RECAP

9/24/2004

December Lean Hogs closed down 0.37 at 70.82.
This was 0.22 up from the low and 0.97 off the high.

February Pork Bellies finished down 2.87 at
100.50, 4.00 off the high and 0.10 up from the low.

The market surged higher for October hogs again
on Friday ahead of the key USDA Hogs and Pigs report as continued strength in
the cash market, a jump in the cash Index and another strong gain on Thursday
afternoon for pork product prices helped to support. The CME 2-Day Lean index
for the period ending September 2nd came in at 78.23 which was up 1.15 from the
previous session. This leaves December hogs at a significant discount to the
cash market. For today’s USDA Hogs and Pigs report, traders are looking for an
inventory in the range of 99.2% to 102% of last year, with kept for breeding
numbers at 99% to 100.3%. The results of the report should set the tone for the
opening.

Technical Outlook

HOGS (DEC) 09/27/2004: A new contract high was
made on the rally. Rising stochastics at overbought levels warrant some caution
for bulls. The close above the 9-day moving average is a positive short-term
indicator for trend. The daily closing price reversal down is a negative
indicator for prices. The market has a slightly positive tilt with the close
over the swing pivot. The near-term upside target is at 72.200. With a reading
over 70, the 9-day RSI is approaching overbought levels. The next area of
resistance is around 71.400 and 72.200, while 1st support hits today at 70.250
and below there at 69.820.

 

COCOA MARKET RECAP

9/24/2004

December Cocoa finished down 64 at 1458, 57 off
the high and 13 up from the low.

Surprisingly cocoa prices failed to respond to
bullish supply stories out of Indonesia, as spec sellers were apparently intent
on exiting their long positions. Supposedly Indonesia has suggested that its
cocoa production might decline by up to 6% because of damage from insects. The
Dow Jones Jakarta news story suggested that the infestation was apparent in all
the planted areas. With Indonesia expected to produce 420,000 tons this year a
6% setback could impact the annual global surplus/deficit tally by 25,200 tons.
In the end the weakness in cocoa was more than just simple technical stop loss
selling.

Technical Outlook

COCOA (DEC) 09/27/2004: Daily stochastics are
showing positive momentum from oversold levels, which should reinforce a move
higher if near-term resistance is taken out. 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 near-term upside target is at 1539. The next area of
resistance is around 1493 and 1539, while 1st support hits today at 1423 and
below there at 1399.

 

COFFEE MARKET RECAP

9/24/2004

December Coffee closed up 1.95 at 83.00. This was
1.20 up from the low and 0.80 off the high.

The coffee market showed signs of recovery on
Friday but the move appeared to be mostly technical in nature. However, with the
US market getting early positive support from London coffee action the overall
strength in prices might have been self propagating. However, it is also clear
that fund sellers are very willing to jump into the coffee market on rallies and
that could keep a lid on the market. Roaster demand would not seem to justify
significant upside action in coffee as the trade is aware of fresh supply coming
from Vietnam and other sub Asian production areas.

Technical Outlook

COFFEE (DEC) 09/27/2004: Momentum studies are
trending lower from high levels which should accelerate a move lower on a break
below the 1st swing support. A positive signal for trend short-term was given on
a close over the 9-bar moving average. The market has a slightly positive tilt
with the close over the swing pivot. The next downside objective is now at
80.95. With a reading over 70, the 9-day RSI is approaching overbought levels.
The next area of resistance is around 84.00 and 84.90, while 1st support hits
today at 82.05 and below there at 80.95.

 

SUGAR MARKET RECAP

9/24/2004

October Sugar closed down 0.09 at 7.79. This was
0.02 up from the low and 0.18 off the high.

March sugar closed 14 lower on the session but
managed to gain 21 points on the session. The market managed to test the
September highs early in the session and the lack of new buying support near the
highs helped to trigger some long liquidation selling into the close. Trade
houses and commercial producer-type accounts were noted as active sellers as
well. Russia beet test results showed a slight rise in sugar content and
contributed to forecasts that sugar production will be near 1.93 million tons
which is close to last years level.

Technical Outlook

SUGAR (MAR) 09/27/2004: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The close above the 9-day moving average is a
positive short-term indicator for trend. The daily closing price reversal down
is a negative indicator for prices. The market’s close below the 1st swing
support number suggests a moderately negative setup for today. The next upside
target is 8.85. The next area of resistance is around 8.72 and 8.85, while 1st
support hits today at 8.54 and below there at 8.48.

 

COTTON MARKET RECAP

9/24/2004

October Cotton finished down 1.61 at 49.40, 1.61
off the high and equal to the low.

Now that the threat of hurricanes have been
discounted it is clear that longs are vacating the market. With both trade and
spec selling noted in the action Friday it would seem like the market is
destined to fall back toward the late July early August consolidation zone. It’s
a little surprising that cotton didn’t get support from the Cotlook forecast
yesterday for the 2004-2005 Chinese crop as they lowered the crop to 6 million
metric tons. With increases in many other production zones the Chinese change is
certainly downplayed.

Technical Outlook

COTTON (DEC) 09/27/2004: The close below the
40-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 market’s close below the 9-day moving average is an indication the
short-term trend remains negative. The market is in a bearish position with the
close below the 2nd swing support number. The next downside objective is now at
45.48. The next area of resistance is around 47.99 and 49.37, while 1st support
hits today at 46.05 and below there at 45.48.