Three Reasons Crude Prices Rose Today

The market came under early selling pressures
from speculative long liquidation selling with talk of a possible shift in the
weather pattern for the Midwest into early June with increasing chances of rains
for Missouri, the Ohio River Valley and even some talk of Illinois rains next
week helping to pressure. Funds were noted sellers of near 3,000 contracts into
the mid-session and traders look for tonight’s weekly COT report to show fund
traders net long near 25,000 contracts. Lower cash markets across the Midwest
this morning and this week from more active old crop corn sales added to the
bearish tone. The technical action this week was bullish but there is also talk
of a short-term overbought condition with some traditional indicators at
extremes which added to the negative tone. July corn closed sharply higher on
the week and the Monday gap above the downtrend channel remains a bullish
longer-term factor. Resistance comes in at 222 1/2 and 224 1/2 with support at
219 and 215 1/2.

Technical Outlook

CORN (JUL) 05/31/2005: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The cross over and close above the 18-day moving average is an
indication the longer-term trend has turned positive. The swing indicator gave a
moderately negative reading with the close below the 1st support number. The
near-term upside target is at 225 1/4. The next area of resistance is around 223
and 225 1/4, while 1st support hits today at 219 1/2 and below there at 218 1/4.

SOY COMPLEX RECAP

5/27/2005

July Soybeans finished down 8 1/4 at 667 3/4, 6
1/4 off the high and 2 3/4 up from the low. November Soybeans closed down 8 1/2
at 668. This was 2 1/2 up from the low and 5 1/2 off the high.

July Soymeal closed down 1.6 at 208.7. This was
1.7 up from the low and 1.5 off the high.

July Soybean Oil finished down 0.52 at 23.26,
0.52 off the high and 0.08 up from the low.

The new contract high and lower close for
November soybeans could attract some additional follow-through technical selling
on Tuesday unless the weather forecast for the mid-west on Tuesday morning is
dry. The possibility of warmer and wetter weather in the longer-term forecast
models along with weekend rains for the southeast, the Ohio Valley and for
Missouri helped ease crop concerns and triggered long liquidation selling ahead
of the long weekend. The fear of a weather shift when traders return from the
long weekend on Tuesday has triggered selling with talk that warm and wet
weather into early June would significantly boost the crop and leave the market
in an overbought condition. Strength at the China and Malaysia exchanges
overnight helped provide some support. The technical action this week was
considered bullish with an upside break-out in July and a series of contract
highs for the November futures. Talk of a short-term overbought condition helped
trigger some profit-taking as well. Resistance for July soybeans comes in at 673
with 662 and 657 1/4 as support.

Technical Outlook

BEANS (JUL) 05/31/2005: Rising stochastics at
overbought levels warrant some caution for bulls. The major trend could be
turning up with the close back above the 18-day moving average. The market setup
is somewhat negative with the close under the 1st swing support. The near-term
upside target is at 677 1/2. The next area of resistance is around 672 1/4 and
677 1/2, while 1st support hits today at 663 1/4 and below there at 659 3/4.

MEAL (JUL) 05/31/2005: Momentum studies are
trending higher but have entered overbought levels. The market now above the
18-day moving average suggests the longer-term trend has turned up. It is a
slightly negative indicator that the close was lower than the pivot swing
number. The next upside objective is 211.8. The market is approaching overbought
levels with an RSI over 70. The next area of resistance is around 210.3 and
211.8, while 1st support hits today at 207.1 and below there at 205.5.

BEANOIL (JUL) 05/31/2005: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The market now above the 18-day moving average suggests the
longer-term trend has turned up. The market’s close below the 1st swing support
number suggests a moderately negative setup for today. The near-term upside
target is at 23.97. The next area of resistance is around 23.56 and 23.97, while
1st support hits today at 22.96 and below there at 22.77.

WHEAT MARKET RECAP

5/27/2005

July Wheat finished down 2 3/4 at 335, 5 1/4 off the high and
1 3/4 up from the low. December Wheat closed down 2 1/4 at 354 1/4. This was 2
1/4 up from the low and 5 1/4 off the high.

The cool and wet weather this week in the plains
has helped ease crop concerns and with more rain in the forecast into early next
week, there are some concerns with harvest delays in the southern plains.
However, harvest delays seem to be a temporary concern but rains in the central
and northern plains could improve crop conditions. Fears that the recent jump in
price will cause US wheat to become less competitive on the world market and a
weak tone for the cash basis level for each of the past three days added to the
negative tone. Fears of damage from last weeks heat in Kansas and talk of
potential harvest delays helped support. Continued dry weather in Australia and
some drought concerns for Spain (talk of 50% loss) helped support the market as
well. South Korea bought 21,500 tonnes of US wheat overnight. July wheat
resistance comes in at 337 3/4 with 332 1/2 and 329 as support.

Technical Outlook

WHEAT (JUL) 05/31/2005: Momentum studies are
trending higher but have entered overbought levels. The cross over and close
above the 18-day moving average indicates the longer-term trend has turned up.
The daily closing price reversal down puts the market on the defensive. It is a
slightly negative indicator that the close was under the swing pivot. The
near-term upside target is at 342 3/4. The next area of resistance is around 338
1/2 and 342 3/4, while 1st support hits today at 331 1/2 and below there at 329.

LIVE CATTLE RECAP

5/27/2005

June Live Cattle finished up 0.47 at 85.07, 0.37
off the high and 0.62 up from the low.

August Feeder Cattle closed up 0.67 at 111.45.
This was 0.85 up from the low and 0.15 off the high.

August cattle closed unchanged on the session for
the second day in a row. Weaker beef prices offset hopes of strong retail demand
for this weekend and talk that Japan is getting closer to allowing US beef
imports. At mid-session, boxed beef cutout values were down $1.31 on the day to
$150.06 as compared with $156.56 one week ago. Slaughter came in at 123,000 head
as compared with trade expectations of 118,000-120,000 head. August cattle had a
bearish weak with significant technical damage as the market closed 95 lower on
the week and gapped the longer-term uptrend channel to start the week.

Technical Outlook

CATTLE (JUN) 05/31/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
major trend has turned down with the cross over back below the 18-day moving
average. A positive setup occurred with the close over the 1st swing resistance.
The next downside objective is 84.020. The next area of resistance is around
85.570 and 86.000, while 1st support hits today at 84.600 and below there at
84.020.

LEAN HOGS RECAP

5/27/2005

June Lean Hogs finished up 1.15 at 72.25, 0.07
off the high and 1.15 up from the low.

August Pork Bellies closed down 2.80 at 70.75.
This was 0.15 up from the low and 2.85 off the high.

July Hogs closed 67 higher on the session led by
a surge up in June futures on expectations for higher cash markets next week.
Packers are likely to need hogs for the holiday shortened week and may need to
bid higher to attract supplies. The market managed to close 5 points higher on
the week. Cash hogs were expected to trade $.50-$1.00 lower but managed to hold
steady which added to the positive tone. The CME 2-Day Lean Index for the period
ending May 25th came in at 73.56 which was down 1.13 from the previous session
and down from 76.40 one week ago. Slaughter came in at 366,000 head as compared
with trade expectations of 365,000-374,000 head.

Technical Outlook

HOGS (JUN) 05/31/2005: The daily stochastics gave
a bullish indicator with a crossover up. The stochastics indicators are rising
from oversold levels, which is bullish and should support higher prices. The
close under the 18-day moving average indicates the longer-term trend could be
turning down. Market positioning is positive with the close over the 1st swing
resistance. The near-term upside target is at 73.200. The next area of
resistance is around 72.850 and 73.200, while 1st support hits today at 71.650
and below there at 70.770.

COCOA MARKET RECAP

5/27/2005

July Cocoa finished down 3 at 1412, 19 off the
high and equal to the low.

An attempt to bounce was flatly rejected by the
cocoa market on Friday despite the fact that the market was moderately oversold.
Even more surprising is that the lower Dollar didn’t seem to discourage the
sellers into the close. With even more significant lows forged in the session it
would seem that even origin players are willing to sell regardless of the low,
oversold price level. The market continued to slide even though the
International Cocoa Merchants Association seemed to float an optimistic
prediction for the 2004-2005 ending stocks. In short, even bullish information
is lost on the current cocoa market.

Technical Outlook

COCOA (JUL) 05/31/2005: Daily stochastics are
trending lower but have declined into oversold territory. The major trend has
turned down with the cross over back below the 18-day moving average. The
outside day down is somewhat negative. It is a slightly negative indicator that
the close was under the swing pivot. The next downside target is 1398. The next
area of resistance is around 1421 and 1435, while 1st support hits today at 1403
and below there at 1398.

COFFEE MARKET RECAP

5/27/2005

July Coffee closed down 1.80 at 121.90. This was
0.80 up from the low and 2.50 off the high.

The September coffee continued to trade above the
100 day moving average on Friday but there was certainly a vulnerable tilt to
the action. As in a number of other markets the end of the month prompted book
squaring by the funds. Apparently ongoing conducive weather in Brazil is
allowing the harvest to progress and that is giving some players the resolve to
sell into the upcoming frost window. Roaster buying is expected to cushion near
term weakness because those buyers like to extend forward coverage ahead of the
frost period in Brazil. The market is seeing some ongoing concern for Vietnam
and El Salvador production but some of that benefit was factored in the March
and April rallies.

Technical Outlook

COFFEE (JUL) 05/31/2005: The major trend has
turned down with the cross over back below the 40-day moving average. Positive
momentum studies in the neutral zone will tend to reinforce higher price action.
The cross over and close above the 18-day moving average is an indication the
longer-term trend has turned positive. The market could take on a defensive
posture with the daily closing price reversal down. The market setup is somewhat
negative with the close under the 1st swing support. The near-term upside
objective is at 125.60. The next area of resistance is around 123.50 and 125.60,
while 1st support hits today at 120.25 and below there at 119.05.

SUGAR MARKET RECAP

5/27/2005

July Sugar closed down 0.05 at 8.75. This was
0.05 up from the low and 0.05 off the high.

An inside day down in sugar seems to have
dampened the very strong bullish tilt that was in place for the second half of
May. However, with the breakout logged on the charts, we suspect that more short
covering will be seen in the coming action, especially since the market fresh
off an aggressively bearish stance put in place in April and May. The July sugar
gets above the 100 day moving average with a rise above 887. World sugar
production was raised slightly in the most recent forecast but we get the sense
that the trade is attempting to factor in better demand figures than was
forecast by the USDA. It is also possible that firming energy prices have
rekindled expectations of alcohol demand in sugar and that is providing the
impetus for the speculative buying.

Technical Outlook

SUGAR (JUL) 05/31/2005: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The cross over and close above the 18-day moving average is an
indication the longer-term trend has turned positive. It is a slightly negative
indicator that the close was under the swing pivot. The near-term upside
objective is at 8.85. The next area of resistance is around 8.79 and 8.85, while
1st support hits today at 8.70 and below there at 8.65.

COTTON MARKET RECAP

5/27/2005

July Cotton finished up 0.05 at 50.43, 0.47 off
the high and 0.15 up from the low.

December cotton closed 4 higher on the session
and up 57 points on the week but closed near the lows of the day on Thursday and
Friday as the market lacks much follow-through buying from rally attempts. Trade
was very slow with light volume as traders will look for new fundamental
developments in into next week. Good rains across Texas seem to be a potentially
bearish short-term factor. China demand will remain as the key to near-term
price direction and traders will continue to monitor the China economy and any
possible changes in currency. Certified cotton stocks deliverable to the
exchange as of May 26th totaled 302,773 bales as compared with 242,239 bales one
week ago and 173,898 bales two weeks ago and 155,937 bales on May 6th.

Technical Outlook

COTTON (JUL) 05/31/2005: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The major trend has turned down with the cross over back
below the 18-day moving average. The market tilt is slightly negative with the
close under the pivot. The next downside target is 49.89. The next area of
resistance is around 50.74 and 51.13, while 1st support hits today at 50.12 and
below there at 49.89.