These 3 Things Supported The Market Today

The gap higher opening, the reversal on Thursday
from a contract low and talk of a record high net short position from fund
traders helped support the solid gains and active buying from fund traders at
the end of the week added to the bullish tone. The daily reversal was confirmed
with a weekly closing price reversal as March corn managed to close ¼ cent
higher on the session. Funds were noted buyers of near 3500 contracts. The
follow-through technical buying after the Thursday reversal is positive
technical action. In addition, the USDA announced a sale of 110,000 tons of US
corn to unknown destination. South Korea is tendering for 100,000 tons of corn
for donation to North Korea. Deliveries came in at 833 contracts. Resistance for
March Corn comes in at 208 3/4 and 210 ¾ with support at 205 3/4 and 203.

Technical Outlook

CORN (MAR) 12/06/2004: The daily stochastics have
crossed over up which is a bullish indication. Rising from oversold levels,
daily momentum studies would support higher prices, especially on a close above
resistance. A positive signal for trend short-term was given on a close over the
9-bar moving average. The gap up on the day session chart gave a bullish
indicator and more follow through could be seen this session. The market’s close
above the 2nd swing resistance number is a bullish indication. The near-term
upside objective is at 209 1/4. The next area of resistance is around 208 1/2
and 209 1/4, while 1st support hits today at 206 and below there at 204.

 

SOY COMPLEX RECAP

12/3/2004

January Soybeans finished up 5 at 525 3/4, 1 1/4
off the high and 5 3/4 up from the low. March Soybeans closed up 4 1/2 at 529
3/4. This was 5 3/4 up from the low and 3/4 off the high.

January Soymeal closed up 2.3 at 154.3. This was
2.3 up from the low and equal to the high.

January Soybean Oil finished up 0.25 at 20.41,
0.09 off the high and 0.22 up from the low.

The trade was weaker than expected early in the
session but soybeans managed to follow the other grains higher into the close.
In spite of the moderate gains, January soybeans closed 22 ¾ cents lower on the
week. January meal lost $7.10 on the week and January oil was down 48 points for
the week. Early in the session the market seemed to lack the buying interest
from speculators except for some short-covering on ideas that the market is
oversold after this weeks collapse. China closed firm overnight and there are
still concerns for Asia rust for Brazil and for the US crop next year. However,
if rust was the primary concern for next years crop, traders are a bit nervous
with the bearish technical action for the November 2005 contract this week as
the market fell 34 1/2 cents off of Friday’s highs and the market gapped lower
to start the week. In addition, for day session only, November soybeans left a
7-day island top with last weeks action and support levels have not held all
week. News of more good weather for Brazil for the weekend and early next week
helped limit the buying support. There was only 1 contract delivered for oil
this morning with meal deliveries still burdensome at 117 contracts. Resistance
for January soybeans comes in at 527 1/4 and 536 with support at 521 and 516.

Technical Outlook

BEANS (JAN) 12/06/2004: Momentum studies trending
lower at mid-range should accelerate a move lower if support levels are taken
out. The market’s close below the 9-day moving average is an indication the
short-term trend remains negative. The daily closing price reversal up on the
daily chart is somewhat positive. A positive setup occurred with the close over
the 1st swing resistance. The next downside objective is now at 517 3/4. The
next area of resistance is around 529 1/4 and 531 1/2, while 1st support hits
today at 522 1/4 and below there at 517 3/4.

MEAL (JAN) 12/06/2004: 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. A positive setup occurred with the close over the 1st swing
resistance. The next downside target is 152.4. The next area of resistance is
around 156.4 and 157.1, while 1st support hits today at 154.0 and below there at
152.4.

BEANOIL (JAN) 12/06/2004: 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.
With the close over the 1st swing resistance number, the market is in a
moderately positive position. The next downside target is 20.11. The next area
of resistance is around 20.54 and 20.67, while 1st support hits today at 20.26
and below there at 20.11.

 

WHEAT MARKET RECAP

12/3/2004

December Wheat finished up 7 1/2 at 291, equal to the high and
7 1/2 up from the low. March Wheat closed up 8 1/4 at 304 1/2. This was 8 1/2 up
from the low and 1/2 off the high.

The market closed sharply higher on the session
led by active fund buying but more importantly, the close was up 1 ½ cents for
the week. As a result, the weekly closing price reversal from a contract low
will be considered a bullish technical signal and could trigger increased
short-covering next week. A bounce in the other grains and some increase in fund
short-covering have helped support the bounce. Rumors that China has switched
some of their purchases from Canada to the US triggered the sharp rally but the
Canadian Wheat Board denied the rumor. US millers are finding a difficult time
in finding high quality soft wheat which helped support. Funds are thought to be
holding a huge net short position in tonight’s weekly Commitment-of-Traders
report. The EU 25 soft wheat production is pegged at 124.51 million tons as
compared with the drought-reduced crop in 2003 of 97.88 million tons. The weak
US dollar, however, has caused some European traders to begin to lower their
export forecasts for the EU. Resistance for March wheat comes in at 308 and 311
with support at 299 ¾ and 297.

Technical Outlook

WHEAT (MAR) 12/06/2004: The crossover up in the
daily stochastics is a bullish signal. The stochastic indicator is rising from
oversold levels, which is bullish and should support higher prices. The market’s
short-term trend is positive on the close above the 9-day moving average. The
market’s close above the 2nd swing resistance number is a bullish indication.
The next upside target is 311 1/2. The next area of resistance is around 309 and
311 1/2, while 1st support hits today at 300 and below there at 293 1/2.

 

LIVE CATTLE RECAP

12/3/2004

February Live Cattle closed down 0.42 at 87.57.
This was 0.72 up from the low and 0.87 off the high.

January Feeder Cattle finished down 0.20 at
101.90, 1.05 off the high and 0.20 up from the low.

Continued long liquidation selling helped to
pressure the February cattle early in the session on Friday. Dry weather in the
plains, fears of weaker demand for beef due to the surge in prices this week and
weakness in the other meats helped to keep the tone bearish. A slowdown in the
speculative long liquidation selling into the mid-session along with a steady
tone for the beef market helped trigger the 80 point bounce into the close.
Traders believe that the weather forecast is dry enough for feedlots to improve
and feeding performance improve so that more market-ready cattle will be
available soon. Boxed-beef cut-out values were down 7 cents at mid-session to
$149.11 as compared with $138.18 last week at this time. Slaughter came in at
just 109,000 head from trade expectations of 105,000-118,000 head.

Technical Outlook

CATTLE (FEB) 12/06/2004: Momentum studies
trending lower at mid-range should accelerate a move lower if support levels are
taken out. The close below the 9-day moving average is a negative short-term
indicator for trend. The market tilt is slightly negative with the close under
the pivot. The next downside objective is now at 86.020. The next area of
resistance is around 88.370 and 89.200, while 1st support hits today at 86.800
and below there at 86.020.

 

LEAN HOGS RECAP

12/3/2004

February Lean Hogs closed down 0.60 at 75.32.
This was 0.22 up from the low and 1.02 off the high.

February Pork Bellies finished down 0.92 at
99.85, 1.55 off the high and 0.45 up from the low.

February hogs pushed moderately lower on the
session but managed to hold support at Thursday’s lows and managed to avoid a
weekly reversal with the close above 75.27. While cash markets were $.50-$1.00
lower, the CME 2-day lean index for the period ending December 1st was reported
at 78.81, up 83 cents from the previous session and up from 78.20 last week at
this time. The stiff discount of futures to the cash market helped provide
underlying support. Peoria cash markets were $1.00 lower in the morning which
contributed to the heavy long liquidation selling early in the day. Slaughter
came in at just 386,000 head from trade expectations of 390,000-398,000 head.

Technical Outlook

HOGS (FEB) 12/06/2004: Momentum studies trending
lower at mid-range should accelerate a move lower if support levels are taken
out. The market’s close below the 9-day moving average is an indication the
short-term trend remains negative. It is a slightly negative indicator that the
close was under the swing pivot. The next downside objective is now at 74.300.
The next area of resistance is around 75.950 and 76.770, while 1st support hits
today at 74.720 and below there at 74.300.

 

COCOA MARKET RECAP

12/3/2004

March Cocoa finished up 58 at 1710, 4 off the
high and 80 up from the low.

The cocoa market surprised the trade with a
significant pulse up and seemed to do so off the news that arrivals into Ivory
Coast ports remain slow and significantly below year ago levels. The market is
under the impression that production is down due to unfavorable weather and less
than normal care. We also suspect that cocoa prices were lifted by the sagging
Dollar and because of technical stop loss buying. While the lower arrivals might
be partly the result of more stringent quality control efforts the trade can’t
rule out lower supplies and that is pushing buyers into the market.

Technical Outlook

COCOA (MAR) 12/06/2004: Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The market’s
short-term trend is positive on the close above the 9-day moving average. The
outside day up is somewhat positive. There could be more upside follow through
since the market closed above the 2nd swing resistance. The near-term upside
target is at 1775. The next area of resistance is around 1752 and 1775, while
1st support hits today at 1668 and below there at 1607.

 

COFFEE MARKET RECAP

12/3/2004

March Coffee closed up 0.15 at 97.95. This was
2.70 up from the low and 0.55 off the high.

The coffee market finished an extremely volatile
trade for the week with a minor upward gain. Apparently the funds really built
their long position this week and commercial or roaster buying was also present
in anticipation of increased demand ahead. Lower Kenyan coffee production was
offset by slightly higher coffee exports from Ecuador. We suspect that the
Ecuador export gain was slightly more important to the coffee futures market
than the Kenyan production decline. With the Brazil report due out December 10th
we suspect that some longs are a little concerned about the lofty prices
recently posted by the market. Estimates for the Brazil crop are extremely
diverse and that would suggest more volatility. NYBOT exchange warehouse stocks
were pegged at 4.55 million bags for a very minimal increase in the day.

Technical Outlook

COFFEE (MAR) 12/06/2004: Daily stochastics
turning lower from overbought levels is bearish and will tend to reinforce a
downside break especially if near-term support is penetrated. A positive signal
for trend short-term was given on a close over the 9-bar moving average. The
upside daily closing price reversal gives the market a bullish tilt. It is a
slightly negative indicator that the close was lower than the pivot swing
number. The next downside objective is 94.20. The 9-day RSI over 70 indicates
the market is approaching overbought levels. The next area of resistance is
around 99.55 and 100.65, while 1st support hits today at 96.35 and below there
at 94.20.

 

SUGAR MARKET RECAP

12/3/2004

March Sugar closed down 0.02 at 8.80. This was
equal to the low and 0.06 off the high.

March sugar closed 2 lower on the session and
down 17 points for the week as light long liquidation selling helped to pull the
market to the lows of the day late in the session. Trade was very quiet with a
lack of new fundamental news helping to keep commercial traders on the
sidelines. Trade house estimates for a world production deficit for the coming
year failed to have much of an impact as traders view the lack of cash market
trade and a steady flow of supply from Brazil as a bearish combination. Russia
has refined 2.05 million tons of white sugar from domestic beets so far this
season as compared with 1.7 million tons last year at this time.

Technical Outlook

SUGAR (MAR) 12/06/2004: The close below the
40-day moving average is an indication the longer-term trend has turned down.
Stochastics turning bearish at overbought levels will tend to support lower
prices if support levels are broken. A negative signal for trend short-term was
given on a close under the 9-bar moving average. The market’s close below the
pivot swing number is a mildly negative setup. The next downside objective is
now at 8.76. The next area of resistance is around 8.83 and 8.87, while 1st
support hits today at 8.77 and below there at 8.76.

 

COTTON MARKET RECAP

12/3/2004

March Cotton finished down 1.20 at 42.42, 1.28
off the high and 0.42 up from the low.

March cotton closed 122 lower on the session and
down 52 points for the week. A lack of trade house support and light selling
from fund traders helped pressure the market. Massive world supplies and a sharp
rise in exportable surplus from the world’s largest exporters helped to keep the
selling pressures in place. Cumulative export sales have reached just 59.2% of
the USDA forecast for the season as compared with 65.3% on average for this time
of the year. Certified cotton stocks deliverable to the exchange as of December
2nd totaled 84,445 bales from 81,442 the previous session and 76,482 bales
earlier this week. Deliveries were 73 lots bringing total deliveries to date to
724. Dry weather in Texas for the week should help increase harvest activity as
fields dried and continued dry weather into next week should be seen as a
bearish force.

Technical Outlook

COTTON (MAR) 12/06/2004: The daily stochastics
gave a bearish indicator with a crossover down. Momentum studies trending lower
at mid-range could accelerate a price break if support levels are broken. A
negative signal for trend short-term was given on a close under the 9-bar moving
average. There could be some early pressure today given the market’s negative
setup with the close below the 2nd swing support. The next downside objective is
now at 40.94. The next area of resistance is around 43.27 and 44.33, while 1st
support hits today at 41.57 and below there at 40.94.