This Is What Provided Some Support To The Market Today

12/7/2004 A lack of follow-through fund
short-covering on the upside combined with a lack of commercial buying interest
on the early break below Monday’s lows to leave the market with a much weaker
technical view. The 3-day bounce off of a contract low in the high on Monday
seems to have supported an increase in speculative selling on hopes that the
recent bounced helped alleviate some of the near record oversold small spec and
fund condition. With a massive US crop to absorb and a weak recent export sales
pace, the market has been left with a bearish supply/demand outlook. The
Supply/demand report on Friday could slow a slight revision lower for corn
exports due to recent export activity from China and a possible revision higher
in China production. If so, the ending stocks forecast may be adjusted higher.
Traders are looking for about a 39 to 41 million bushel increase in ending
stocks from last months figure, which would then be added to the 1.819 billion
bushel reading from last month. After several days absent, fund selling is more
active today. Resistance for March Corn comes in at 208 3/4 and 210 3/4 with
support at 205 1/2 and 204 1/2.

Technical Outlook

CORN (MAR) 12/08/2004: The market broke to a new
contract low. Rising from oversold levels, daily momentum studies would support
higher prices, especially on a close above resistance. The market’s short-term
trend is negative as the close remains below the 9-day moving average. The
market is in a bearish position with the close below the 2nd swing support
number. The next upside objective is 211. The next area of resistance is around
206 1/2 and 211, while 1st support hits today at 200 and below there at 197 3/4.

 

SOY COMPLEX RECAP

12/7/2004

January Soybeans finished down 7 3/4 at 522, 9
1/2 off the high and 1/2 up from the low. March Soybeans closed down 9 at 525.
This was 1 up from the low and 9 1/2 off the high.

January Soymeal closed down 2.4 at 156.0. This
was 0.3 up from the low and 3.0 off the high.

January Soybean Oil finished down 0.26 at 19.92,
0.3 off the high and 0.02 up from the low.

The early bounce was met with speculative selling
interest and the lack of commercial buying support allowed for a quick drop
below yesterday’s lows. Favorable weather for the start of the South American
crop has allowed commercial buyers to take a wait and see attitude towards new
purchases and a lack of new news from China, the primary buyer recently, has
left the market without short-term commercial support. Ideas that the 2-day
spurt of nearly 14 cents was enough to alleviate some of the oversold technical
condition added to the weakened posture of the market today. While the talk of a
slowdown in the crush pace has supported the products recently, the news is seen
as a bearish force for soybeans. Taiwan announced a tender to buy 33,000-60,000
tonnes of US soybeans. There were no deliveries for oil and just 3 for meal. For
Friday’s USDA supply/demand report, a Reuter’s survey showed an average trade
estimate for the 2004/2005 ending stocks at 478 million bushels as compared with
460 million last month. Resistance for January soybeans comes in at 531 1/2 and
536 with support at 521 and 514 3/4.

Technical Outlook

BEANS (JAN) 12/08/2004: 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. The
market is in a bearish position with the close below the 2nd swing support
number. The next downside objective is 514 1/4. The next area of resistance is
around 527 and 534 1/4, while 1st support hits today at 517 and below there at
514 1/4.

MEAL (JAN) 12/08/2004: A negative indicator was
given with the downside crossover of the 9 & 18 bar moving average. Stochastics
trending lower at midrange will tend to reinforce a move lower especially if
support levels are taken out. The close below the 9-day moving average is a
negative short-term indicator for trend. The outside day down is a negative
signal. The close below the 2nd swing support number puts the market on the
defensive. The next downside target is 152.8. The next area of resistance is
around 158.2 and 161.1, while 1st support hits today at 154.0 and below there at
152.8.

BEANOIL (JAN) 12/08/2004: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The market’s close below the 9-day moving average is an
indication the short-term trend remains negative. The market’s close below the
1st swing support number suggests a moderately negative setup for today. The
next downside target is now at 19.56. The next area of resistance is around
20.07 and 20.37, while 1st support hits today at 19.67 and below there at 19.56.

 

WHEAT MARKET RECAP

12/7/2004

December Wheat finished down 6 at 287, 5 1/2 off the high and
1 1/4 up from the low. March Wheat closed down 6 1/2 at 299. This was 1 up from
the low and 5 off the high.

Funds were noted sellers of near 3000 contracts
into the mid-session and the lack of commercial buyers left the market in a long
liquidation mode. Fears of continued hefty supply to work through on the world
market and the lack of commercial support triggered the quick 4 1/2 cent break
after the opening. Israel issued a tender to buy 25,000 tons of feed wheat and
other export news is quiet. Stats Canada will release crop production forecasts
for the summer crop with the all-wheat average trade estimate at 20.6 million
tonnes from 20.78 million tonnes as last months forecast. The smaller crop, and
news that a large portion of the crop will not grade out as higher quality, has
provided recent support. Jordan issued a tender to buy 100,000 tons of hard
wheat. Similar to the other grains, fund sellers are mare active sellers and
commercial buyers seem to be on the sidelines. For Friday’s USDA supply/demand
report, a Reuter’s survey showed an average trade estimate for the 2004/2005
ending stocks at 551 million bushels as compared with 568 million last month.
Resistance for March wheat comes in at 304 and 308 3/4 with 297 and 295 as
support.

Technical Outlook

WHEAT (MAR) 12/08/2004: Rising from oversold
levels, daily momentum studies would support higher prices, especially on a
close above resistance. A negative signal for trend short-term was given on a
close under the 9-bar moving average. The gap down on the day session chart is
bearish with more selling pressure possible today. The close below the 2nd swing
support number puts the market on the defensive. The near-term upside objective
is at 306. The next area of resistance is around 302 and 306, while 1st support
hits today at 296 and below there at 294.

 

LIVE CATTLE RECAP

12/7/2004

February Live Cattle closed down 0.65 at 87.25.
This was 0.50 up from the low and 0.65 off the high.

January Feeder Cattle finished down 0.37 at
101.02, 0.62 off the high and 0.17 up from the low.

February cattle pushed sharply lower early into
the mid-session and moved under 87.00 for the third session in a row but bounced
late in the day. Long liquidation selling has been a constant this week with
fear of weaker beef prices and improving weather for feedlot performance seen as
bearish factors. Traders await cash market news this week with packer bids
coming in near $82.00 and offers at $90.00 as compared with cash trade last week
at $90.00. Traders expect cash to trade near $88-89 this week. The Canadian
ambassador to the US on Tuesday indicated that exports of some Canadian cattle
under 30 months old are likely to flow by the spring. Boxed-beef cut-out values
at mid-session were up 52 cents to $148.30 as compared with 145.23 last week at
this time.

Technical Outlook

CATTLE (FEB) 12/08/2004: 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. The
market setup is somewhat negative with the close under the 1st swing support.
The next downside target is now at 86.150. The next area of resistance is around
87.800 and 88.420, while 1st support hits today at 86.670 and below there at
86.150.

 

LEAN HOGS RECAP

12/7/2004

February Lean Hogs closed down 0.95 at 72.37.
This was 0.12 up from the low and 1.57 off the high.

February Pork Bellies finished up 0.65 at 97.50,
0.40 off the high and 2.00 up from the low.

February hogs pushed moderately lower on the
session with follow-through technical selling after yesterday’s collapse helping
to drive the market to the lowest level since November 10th. Fund long
liquidation selling was active for the second day in a row. Lower trade in the
live cash hog market and expectations for a significant drop in pork product
prices in the weeks just ahead led by the ham market helped to pressure futures.
The CME 2-day lean index for the period ending December 3rd was reported at
81.00, up $1.11 on the session and up from 77.38 last week at this time. This
leaves February hogs at an 850 point discount to the cash market as compared
with a typical premium of 200-400 points at this time of the year.

Technical Outlook

HOGS (FEB) 12/08/2004: Stochastics trending lower
at midrange will tend to reinforce a move lower especially if support levels are
taken out. The close below the 9-day moving average is a negative short-term
indicator for trend. The close below the 1st swing support could weigh on the
market. The next downside target is now at 71.050. The next area of resistance
is around 73.200 and 74.420, while 1st support hits today at 71.520 and below
there at 71.050.

 

COCOA MARKET RECAP

12/7/2004

March Cocoa finished down 27 at 1687, 22 off the
high and 2 up from the low.

The cocoa market slipped slightly lower in the
recent range and would seem to be headed back to the gap down at $1,675 basis
the March contract. We have to think that South African Peace efforts are at
least part of the profit taking mentality. As suggested yesterday it would seem
like the cocoa market is moving to weaker hands as the specs have been the
buyers over the last two sessions and the origin and commercial players seem to
be the sellers. A failure to follow through on the downside in the Dollar might
have prompted some arbitrage selling of US cocoa.

Technical Outlook

COCOA (MAR) 12/08/2004: 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 market setup is somewhat negative with the close
under the 1st swing support. The near-term upside target is at 1716. The next
area of resistance is around 1699 and 1716, while 1st support hits today at 1675
and below there at 1668.

 

COFFEE MARKET RECAP

12/7/2004

March Coffee closed down 0.25 at 97.40. This was
1.30 up from the low and 0.10 off the high.

Given the historic net long of the fund traders,
it is surprising that March coffee was able to see a sharp rebound off the day’s
lows to cut losses to only 25 points. Overall, March coffee is still hemmed in a
range ahead of the Brazil’s government 2005/06 crop production estimate released
late Friday. However, reports that Brazil exported 23% more coffee in November
than a year ago likely weighed on the market. While producer selling has been
light, providing little resistance to fund buying, producers are likely become
more aggressive sellers once the government’s crop production estimate is known.
March coffee is likely to work sideways to lower ahead of Friday’s report with
support at 96 then 95.

Technical Outlook

COFFEE (MAR) 12/08/2004: Daily stochastics
turning lower from overbought levels is bearish and will tend to reinforce a
downside break especially if near-term support is penetrated. The market’s
short-term trend is positive on the close above the 9-day moving average. It is
a slightly negative indicator that the close was under the swing pivot. The next
downside target is now at 95.75. The next area of resistance is around 98.10 and
98.50, while 1st support hits today at 96.75 and below there at 95.75.

 

SUGAR MARKET RECAP

12/7/2004

March Sugar closed down 0.16 at 8.70. This was
0.01 up from the low and 0.19 off the high.

Speculative long liquidation pushed March sugar
sharply lower Tuesday with the market unable to hold support at 880. The While
below an historical extreme, the latest COT report with options showed fund
traders were holding a net long position of 95,716 contracts which is high and
put the market in a vulnerable position for profit taking. Despite expectations
of a supply deficit in 2004/05, high freight rates and high sugar prices have
kept cash buyers sidelined so the market lacked near-term fundamental support. A
break under 866 for March sugar would put the next downside target at 850.

Technical Outlook

SUGAR (MAR) 12/08/2004: The close under the
40-day moving average indicates the longer-term trend could be turning down.
Stochastics trending lower at midrange will tend to reinforce a move lower
especially if support levels are taken out. The close below the 9-day moving
average is a negative short-term indicator for trend. A negative signal was
given by the outside day down. There could be some early pressure today given
the market’s negative setup with the close below the 2nd swing support. The next
downside target is 8.55. The next area of resistance is around 8.80 and 8.94,
while 1st support hits today at 8.60 and below there at 8.55.

 

COTTON MARKET RECAP

12/7/2004

March Cotton finished up 0.66 at 43.19, 0.01 off
the high and 0.74 up from the low.

March cotton saw follow through gains Tuesday as
the bullish key reversal action Monday looks to have attracted some near-term
short covering. Reports of merchant buying would suggest weekly export sales
number could be strong or above expectations. China left import quotas unchanged
for 2005 vs 2004 at 4.1 million bales, however, the quota could be expanded as
the year progresses. Despite the improved technical action, a major reversal in
market trend seems unlikely at this time since the market is has to contend with
a huge world cotton supply outlook. March cotton has near-term resistance at
43.25 to 43.30.

Technical Outlook

COTTON (MAR) 12/08/2004: 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. Market positioning is positive with the close over the
1st swing resistance. The next downside target is 42.26. The next area of
resistance is around 43.56 and 43.75, while 1st support hits today at 42.82 and
below there at 42.26.