This Is What Is Strange About The Canadian Dollar

The early gains were supported by active weekly
sales but a weak tone in wheat and ideas that the market has made strides in
correcting the oversold condition helped trigger some light selling. In
addition, traders remain nervous that producer selling could intensify during
the second half of harvest as space constraints become a bigger issue. Weekly
export sales came in at 1.311 million tons as compared with trade expectations
at 1.0-1.4 million tons and 843,900 tons necessary each week to reach the USDA
projection. Cumulative sales have reached 26.6% of the USDA forecast for the
entire season as compared with 28% on average for this time of the year. Gulf
basis was firm this morning due to slow producer selling. Support for December
corn comes in at 203 1/4 and 201 3/4 with 209 1/2 and 210 1/2 as resistance.

Technical Outlook

CORN (DEC) 10/22/2004: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. A negative signal for trend short-term was
given on a close under the 9-bar moving average. 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 210. The next area of
resistance is around 206 1/2 and 210, while 1st support hits today at 202 and
below there at 200 3/4.

 

SOY COMPLEX RECAP

10/21/2004

November Soybeans finished down 4 1/2 at 528, 9
1/4 off the high and 1 up from the low. January Soybeans closed down 3 3/4 at
531. This was 1 1/4 up from the low and 8 1/2 off the high.

December Soymeal closed up 0.1 at 158.5. This was
0.7 up from the low and 2.0 off the high.

December Soybean Oil finished down 0.23 at 20.4,
0.43 off the high and 0.04 up from the low.

Firm cash markets and fund short-covering
provided the base for solid gains in soybeans and products in the morning
session but weak cash basis levels at the gulf (down 1-2 cents) and increased
commercial selling helped trigger the late break and weak close. Fund buying
dried up shortly after the higher opening. Weekly export sales for soybeans came
in at 987,800 tons as compared with trade expectations at 900,000-1.2 million
tons and 360,600 tons necessary each week to reach the USDA projection.
Cumulative sales have reached 40.7% of the USDA forecast for the entire season
as compared with 39.2% on average for this time of the year. China was the
largest buyer at 298,600 tons with 226,000 of the total going to unknown
destination. Sales for meal were 230,700 tons vs. 150,000-225,000 tons expected
and 57,900 tons necessary each week to reach the USDA projection. Cumulative
sales have reached 40.7% of the USDA forecast for the entire season as compared
with 31% on average for this time of the year. Oil sales were 8200 tons vs.
expectations at 5,000-20,000 tons. While traders have been impressed with the
ability of the market to bounce back to almost pre-report levels, there were
also plenty of traders waiting to sell the bounce with a bumper crop to absorb.
November soybean resistance comes in at 539 and 549 with 525 1/4 and 521 1/2 as
support.

Technical Outlook

BEANS (NOV) 10/22/2004: Momentum studies are
trending higher from mid-range, which should support 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. The daily closing price reversal down puts the
market on the defensive. The close below the 1st swing support could weigh on
the market. The next upside objective is 540 1/4. The next area of resistance is
around 533 and 540 1/4, while 1st support hits today at 523 and below there at
520.

MEAL (DEC) 10/22/2004: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. A positive signal for trend short-term was
given on a close over the 9-bar moving average. The close over the pivot swing
is a somewhat positive setup. The near-term upside target is at 161.5. The next
area of resistance is around 159.8 and 161.5, while 1st support hits today at
157.2 and below there at 156.2.

BEANOIL (DEC) 10/22/2004: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. A positive signal for trend short-term was given on a close over
the 9-bar moving average. The outside day down and close below the previous
day’s low is a negative signal. The swing indicator gave a moderately negative
reading with the close below the 1st support number. The near-term upside
objective is at 20.96. The next area of resistance is around 20.63 and 20.96,
while 1st support hits today at 20.17 and below there at 20.03.

 

WHEAT MARKET RECAP

10/21/2004

December Wheat finished down 1 3/4 at 311 3/4, 2 3/4 off the
high and 2 3/4 up from the low. March Wheat closed down 3 at 322. This was 2 1/4
up from the low and 3 1/2 off the high.

Slow weekly sales news and follow-through
technical selling from the weak close on Wednesday helped to trigger speculative
long liquidation selling which pushed the market to a new 5-session low. Weekly
export sales came in at 318,100 tons as compared with trade expectations at
400,000-600,000 tons and 328,000 tons necessary each week to reach the USDA
projection. Cumulative sales have reached 59.4% of the USDA forecast for the
entire season as compared with 48% on average for this time of the year. Taiwan
and South Korea were the largest buyers. News that Egypt bought 355,000 tons
from Argentina and 60,000 tons of US wheat overnight was seen as disappointing
to exporters and the trade assumes that cheaper prices may be necessary to keep
US wheat competitive on the world market. South Korea millers bought 20,000 tons
and 21,400 tons of US wheat in separate tenders overnight while Japan bought
151,000 tons of wheat at their weekly tender, 90,000 from the US. Pakistan
officials are likely to finalize plans to import more wheat soon with talk of a
tender for 500,000 tonnes in the next few days. With the sharp break in the US
dollar, traders seem to have a little more confidence that US sales could remain
on track to exceed the USDA forecast. December wheat support comes in at 309 and
306 1/4 with resistance at 314 1/2 and 319 1/4.

Technical Outlook

WHEAT (DEC) 10/22/2004: Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The market’s
short-term trend is negative as the close remains below the 9-day moving
average. The defensive setup, with the close under the 2nd swing support, could
cause some early weakness. The next upside target is 317 1/4. The next area of
resistance is around 314 1/2 and 317 1/4, while 1st support hits today at 309
and below there at 306 1/4.

 

LIVE CATTLE RECAP

10/21/2004

December Live Cattle closed unchanged at 87.00.
This was 0.15 up from the low and 0.55 off the high.

November Feeder Cattle finished down 0.65 at
109.95, 1.00 off the high and 0.05 up from the low.

The cattle market inched higher in quiet, choppy
trade as the market took a breather after Wednesday’s collapse. Strong gains in
hogs helped support the market and so did ideas that the break was overdone.
Fears that the beef will top out soon, the premium structure of the December
contract to the cash market and fear that packer demand will remain weak
slaughter helped limit the buying. Cash markets were bid at $84.00 with offers
at $86.00-$87.00 as compared with last weeks trade at $86.00. Packer margins
have improved over the past week but may not have improved enough to boost
slaughter. Several plants were closed for one day on Wednesday due to poor
margins. Slaughter was only 107,000 head on Wednesday but traders believed that
slaughter would jump back to 120,000-125,000 head today. After the close,
slaughter was pegged at 129,000 head. Boxed-beef prices were up 80 cents to
$143.51 at noon as compared with $138.28 last week at this time.

Technical Outlook

CATTLE (DEC) 10/22/2004: Negative momentum
studies in the neutral zone will tend to reinforce lower price action. The close
below the 9-day moving average is a negative short-term indicator for trend. It
is a slightly negative indicator that the close was lower than the pivot swing
number. The next downside target is now at 86.420. The next area of resistance
is around 87.320 and 87.770, while 1st support hits today at 86.650 and below
there at 86.420.

 

LEAN HOGS RECAP

10/21/2004

December Lean Hogs closed up 1.25 at 67.15. This
was 0.85 up from the low and 0.20 off the high.

February Pork Bellies finished up 1.62 at 94.42,
0.27 off the high and 1.17 up from the low.

The hog market pushed sharply higher on the
session led by higher cash markets and the discount of futures to cash. Live
markets were $.50-$1.00 higher and this supported more active commercial buying
in the pit. With commercial and fund traders on the buy side and the market at a
stiff discount to cash, the market lacked new sellers at current prices. The CME
2-Day Lean Index for the period ending October 19th was reported at 70.06, down
$.44 from the previous session and down from 77.01 on October 7th. Slaughter
came in at 401,000 head (4th day in a row over 400,000) as compared with trade
expectations at 399,000-402,000.

Technical Outlook

HOGS (DEC) 10/22/2004: The cross over and close
above the 40-day moving average indicates the longer-term trend has turned up.
Momentum studies are trending higher from mid-range, which should support a move
higher if resistance levels are penetrated. The close above the 9-day moving
average is a positive short-term indicator for trend. The market’s close above
the 2nd swing resistance number is a bullish indication. The near-term upside
objective is at 68.020. The next area of resistance is around 67.650 and 68.020,
while 1st support hits today at 66.650 and below there at 65.950.

 

COCOA MARKET RECAP

10/21/2004

December Cocoa finished up 7 at 1434, 10 off the
high and 3 up from the low.

After a minor attempt to rally cocoa prices
settled back to a very slight gain for the session. The Ivory Coast farmers did
express hope that they would get adequate funding from the government and that
the strike would end and that seemed to rob the market of additional upside
interest. With a large number of farmers still unhappy with the amount of
funding for the Ivory Coast producer COOP it is possible a deal can be struck
and some farmers will still protest and attempt to disrupt physical flow.
However, seeing some farmer agree would probably leave the near term edge with
the bear camp.

Technical Outlook

COCOA (DEC) 10/22/2004: 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 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 near-term upside objective is at 1448. The next
area of resistance is around 1440 and 1448, while 1st support hits today at 1428
and below there at 1423.

 

COFFEE MARKET RECAP

10/21/2004

December Coffee closed up 0.90 at 75.55. This was
1.15 up from the low and 0.50 off the high.

The coffee market managed a higher trade and
reached the highest level since October 12th but there would appear to be
significant overhead resistance. Supposedly some industry players were buying
and that gave the market the impetus to climb above several layers of chart
resistance. We must note that prices managed to rise even in the face of origin
or hedge selling pressure. It was also thought that the funds were buyers once
the December contract managed to rise above 75.00. Apparently the flow of
Brazilian beans to the consumer is being delayed due to a lack of shipping space
but we don’t think that is providing any support to futures prices.

Technical Outlook

COFFEE (DEC) 10/22/2004: Daily momentum studies
are on the rise from low levels and should accelerate a move higher on a push
through the 1st swing resistance. A positive signal for trend short-term was
given on a close over the 9-bar moving average. It is a mildly bullish indicator
that the market closed over the pivot swing number. The near-term upside
objective is at 77.00. The next area of resistance is around 76.35 and 77.00,
while 1st support hits today at 74.75 and below there at 73.75.

 

SUGAR MARKET RECAP

10/21/2004

March Sugar closed down 0.01 at 9.03. This was
0.15 up from the low and 0.01 off the high.

There continues to be talk that Brazil might
attempt to market ethanol on an international basis and that could mean a
significant increase in domestic consumption. The market thinks that the ethanol
sales from Brazil would be targeting China. Therefore, sugar continues to get
periodic price support from the energy market fundamentals. Reports that Russian
January through September white sugar output declined by 25% on the year should
also have supported sugar prices Thursday, as should have reports from Hershey
that profits soared on strong sales.

Technical Outlook

SUGAR (MAR) 10/22/2004: 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 8.84. The next area of resistance is
around 9.11 and 9.15, while 1st support hits today at 8.95 and below there at
8.84.

 

COTTON MARKET RECAP

10/21/2004

December Cotton finished down 2.18 at 45.81, 1.59
off the high and 0.01 up from the low.

After Weekly export sales expectations of 150,000
to 300,000 bales, the actual reading of 191,000 bales was considered a middle of
the road reading. However, the reading was roughly twice the amount of the prior
weak and that could have been seen as supportive. However, cotton prices
continued to sag up small spec sales and fears of a burgeoning crop. The
producers have so much cotton from the bumper crop that they can probably
finance their entire operating loans with the extra cotton produced above
expectations. The market also continues to see a lack of buying bids and that
simply leaves the market without underlying support.

Technical Outlook

COTTON (DEC) 10/22/2004: Positive momentum
studies in the neutral zone will tend to reinforce higher price action. The
market’s short-term trend is negative as the close remains below the 9-day
moving average. The defensive setup, with the close under the 2nd swing support,
could cause some early weakness. The near-term upside target is at 47.80. The
next area of resistance is around 46.60 and 47.80, while 1st support hits today
at 45.01 and below there at 44.61.