Treasuries Fall–Here’s Why

Early weakness was triggered by slow weekly sales
data and continued concerns that ending stocks will increase in Friday’s USDA
report. Some light fund selling added to the negative tone and strength in the
other grains failed to provide much support. The selling increased when the
other grains pushed lower on the session with the trade expecting ending stocks
to jump by near 110 million bushels due to lower exports and lower domestic feed
consumption. Last months ending stocks forecast was already hefty at 2.055
billion bushels. Weekly export sales came in at just 664,500 tons as compared
with trade expectations for 700,000-900,000 tons. Cumulative sales have reached
72.4% of the USDA forecast for the season as compared with 70.7% as the 5-year
average for this time of the year. Taiwan is tendering to buy 56,000-60,000
tonnes of US or Argentina corn on Friday. May corn support comes in at 205 and
203 1/4 with 207 and 210 1/4 as resistance.

Technical Outlook

CORN (MAY) 04/08/2005: Momentum studies are
declining, but have fallen to oversold levels. The market back below the 18-day
moving average suggests the longer-term trend could be turning down. The market
setup is somewhat negative with the close under the 1st swing support. The next
downside objective is now at 204. The next area of resistance is around 206 1/2
and 207 3/4, while 1st support hits today at 204 1/2 and below there at 204.

 

SOY COMPLEX RECAP

4/7/2005

May Soybeans finished up 1/4 at 623 1/2, 6 1/2
off the high and 3 1/2 up from the low. November Soybeans closed up 1 1/2 at 613
1/4. This was 3 3/4 up from the low and 3 3/4 off the high.

May Soymeal closed up 1.7 at 188.3. This was 1.5
up from the low and 0.4 off the high.

May Soybean Oil finished down 0.18 at 22.68, 0.47
off the high and 0.03 up from the low.

Follow-through technical buying after the more
positive technical action of the past few days helped support the early gains.
While the weekly export sales news was not enough to provide a decisive impact
in either direction, the announcement of a daily sale of 120,000 tons of US
soybeans to unknown destination helped to provide underlying support. In
addition, there is talk of interest from China in US soybeans from the Pacific
Northwest and rumors that 1 cargo was purchased at the gulf this morning. There
was a lack of follow-through buying after the early rally and some long
liquidation from speculators pressured the market to lower on the day late in
the session. Traders are looking for a 44 million bushels decline in US ending
stocks for the US supply/demand report for release before the opening Friday and
for an 8-10 million ton decline in world ending stocks due to a revision lower
in southern hemisphere production. Weekly export sales came in at 571,500 tons
as compared with trade expectations for 400,000-600,000 tons. Cumulative sales
have reached 96.3% of the USDA forecast for the season as compared with 91.3% as
the 5-year average for this time of the year. As a result of the fast pace,
traders are looking for a revision higher by the USDA in exports for the report
in the morning. Weekly export sales for meal came in at just 33,500 tons as
compared with trade expectations for 75,000-125,000 tons. Cumulative sales have
reached 82.7% of the USDA forecast for the season as compared with 75.2% as the
5-year average for this time of the year. Oil sales came in at 7500 tons from
expectations at 0-5,000 tons. May soybean support comes in at 618 and 611 with
628 1/4 as resistance.

Technical Outlook

BEANS (MAY) 04/08/2005: The daily stochastics
have crossed over up which is a bullish indication. Daily stochastics are
showing positive momentum from oversold levels, which should reinforce a move
higher if near term resistance is taken out. The close under the 18-day moving
average indicates the longer-term trend could be turning down. The market has a
slightly positive tilt with the close over the swing pivot. The next upside
objective is 634 1/4. The next area of resistance is around 628 1/2 and 634 1/4,
while 1st support hits today at 618 1/2 and below there at 614 1/4.

MEAL (MAY) 04/08/2005: The daily stochastics have
crossed over up which is a bullish indication. The stochastics indicators are
rising from oversold levels, which is bullish and should support higher prices.
The market back below the 18-day moving average suggests the longer-term trend
could be turning down. The market has a slightly positive tilt with the close
over the swing pivot. The next upside objective is 189.9. The next area of
resistance is around 189.2 and 189.9, while 1st support hits today at 187.4 and
below there at 186.2.

BEANOIL (MAY) 04/08/2005: Momentum studies are
declining, but have fallen to oversold levels. The close under the 18-day moving
average indicates the longer-term trend could be turning down. 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 now at 22.29. The next area of resistance is around
22.92 and 23.29, while 1st support hits today at 22.43 and below there at 22.29.

 

WHEAT MARKET RECAP

4/7/2005

May Wheat finished unchanged at 314 1/4, 2 1/4 off the high
and 1 1/4 up from the low. July Wheat closed unchanged at 324 1/2. This was 2 up
from the low and 1 1/2 off the high.

Ideas that futures are oversold ahead of the USDA
Supply/Demand report helped to provide early support to the wheat market but
general long liquidation selling emerged to push wheat and the other grain
markets lower. Weekly export sales came in at just 230,400 tons as compared with
trade expectations for 350,000-500,000 tons. Cumulative sales have reached 91.1%
of the USDA forecast for the season as compared with 86.8% as the 5-year average
for this time of the year. Positioning ahead of the Supply/Demand reports for
Friday morning before the opening kept the market from moving too far in either
direction. Traders are looking for about a 5 million bushels decline in ending
stocks for the 2004/2005 season as compared with last months estimate of 553
million bushels. The CBOT raised margin requirements for wheat beginning with
the Thursday night trade. The EU granted export licenses to export 245,000
tonnes of wheat with a refund of 2.00 euros per tonne which is down from 3.9
euros last week. May wheat resistance comes in at 319 1/2 with 309 1/2 as next
support.

Technical Outlook

WHEAT (MAY) 04/08/2005: Daily stochastics are
trending lower but have declined into oversold territory. The close below the
18-day moving average is an indication the longer-term trend has turned down.
The market’s close below the pivot swing number is a mildly negative setup. The
next downside target is 311. Some caution in pressing the downside is warranted
with the RSI under 30. The next area of resistance is around 316 and 318, while
1st support hits today at 312 1/2 and below there at 311.

 

LIVE CATTLE RECAP

4/7/2005

April Live Cattle finished down 0.17 at 87.77,
0.62 off the high and 0.02 up from the low.

May Feeder Cattle closed down 0.15 at 103.92.
This was 0.02 up from the low and 0.67 off the high.

June cattle closed 10 lower on the day but down
62 from the highs of the day as the early rally attempt failed to generate new
buying support and fund traders continue to liquidate long positions. The early
strength was trigger by talk of the oversold condition of the market, ideas that
the futures are at a hefty discount to the cash market and news that Taiwan
bought US beef for the fist time since December of 2003. Boxed-beef cut-out
values at mid-session were up $.02 to $154.67 as compared with $152.25 last
week. Slaughter came in at 117,000 head from trade estimates of 115,000-120,000
head.

Technical Outlook

CATTLE (APR) 04/08/2005: Momentum studies
trending lower at mid-range should accelerate a move lower if support levels are
taken out. The market back below the 18-day moving average suggests the
longer-term trend could be turning down. It is a slightly negative indicator
that the close was under the swing pivot. The next downside objective is now at
87.300. The next area of resistance is around 88.100 and 88.570, while 1st
support hits today at 87.470 and below there at 87.300.

 

LEAN HOGS RECAP

4/7/2005

April Lean Hogs finished down 0.37 at 66.52, 0.32
off the high and 0.22 up from the low.

May Pork Bellies closed up 0.65 at 92.75. This
was 0.30 up from the low and 0.65 off the high.

The market inched higher with choppy, two-sided
trade as a move to the lowest level since February 15th failed to attract new
selling and after a 3-day, 500 point collapse there was talk of a short-term
oversold condition. The CME 2-day lean index was up 43 cents to 67.79 as
compared with 67.02 the previous week. Concerns with the premium of futures to
cash and concerns that slaughter and weight numbers have been running a bit
higher than expectations helped to limit the buying support. Slaughter came in
at 388,000 head from trade estimates of 390,000-396,000 head.

Technical Outlook

HOGS (APR) 04/08/2005: Daily stochastics are
trending lower but have declined into oversold territory. The close under the
18-day moving average indicates the longer-term trend could be turning down. It
is a slightly negative indicator that the close was lower than the pivot swing
number. The next downside target is 66.020. Some caution in pressing the
downside is warranted with the RSI under 30. The next area of resistance is
around 66.770 and 67.070, while 1st support hits today at 66.270 and below there
at 66.020.

 

COCOA MARKET RECAP

4/7/2005

May Cocoa finished down 3 at 1552, 22 off the
high and 22 up from the low.

The cocoa market forged a surprisingly wide range
after opening a little lower. Unfortunately for traders the market can’t really
draw many conclusions from the price action but the fact that the range was so
wide would seem to suggest that something fresh was seen from the fundamental
perspective. Maybe the early slide in prices was a delayed reaction to the Peace
progress but once the short covering ran its course the market couldn’t find
additional buyers to solidify the higher price level. While the market still
holds on to some minimal deficit forecast for the coming year we just don’t see
much uncertainty derived from the supply and demand equation in the coming
weeks. Therefore, the best odds would seem to favor more consolidation.

Technical Outlook

COCOA (MAY) 04/08/2005: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The market back below the 18-day moving average suggests
the longer-term trend could be turning down. It is a mildly bullish indicator
that the market closed over the pivot swing number. The next downside objective
is 1508. The next area of resistance is around 1574 and 1596, while 1st support
hits today at 1530 and below there at 1508.

 

COFFEE MARKET RECAP

4/7/2005

May Coffee closed down 2.75 at 121.95. This was
0.45 up from the low and 3.80 off the high.

July coffee opened higher but closed 270 lower on
the session and closed at the lowest level since March 29th with a steady flow
of speculative long liquidation selling helping to pressure. Wednesday’s rally
to the highest level since March 22nd failed to attract new buying and ideas
that the market is still overbought helped trigger the selling. In addition,
commercial buyers have been slow to enter the market on the break. The market
closed just 65 points above the 50-day moving average which has not been
penetrated since November 3rd.

Technical Outlook

COFFEE (MAY) 04/08/2005: A crossover down in the
daily stochastics is a bearish signal. Momentum studies are still bearish but
are now at oversold levels and will tend to support reversal action if it
occurs. The close under the 18-day moving average indicates the longer-term
trend could be turning down. The swing indicator gave a moderately negative
reading with the close below the 1st support number. The next downside target is
118.55. The next area of resistance is around 124.05 and 127.00, while 1st
support hits today at 119.85 and below there at 118.55.

 

SUGAR MARKET RECAP

4/7/2005

May Sugar closed up 0.09 at 8.66. This was 0.12
up from the low and 0.01 off the high.

July sugar closed 9 higher on the session and up
for the third day in a row. Early weakness due to a weak tone for nearby futures
in London failed to generate new selling interest. Egypt extended their tender
to buy 100,000 tons of raw sugar indicating that import prices were looking
quite high compared with local prices. Egypt produces about 1.4 million tonnes
of sugar with consumption thought to be near 2.2 million tonnes. Speculative
buying supported the market with late buying pushing the market to near the
highs of the day into the close. Brazil new crop sugar will be available soon
but domestic demand in Brazil looks firm ahead of more active new crop
production soon. At a center-south conference of government and private industry
representatives, the group believes that the center-south cane crop will be near
6-8% higher than last year’s 327 million tonnes harvest. This is slightly below
trade expectations but would be a new record high crop.

Technical Outlook

SUGAR (MAY) 04/08/2005: Daily momentum studies
are on the rise from low levels and should accelerate a move higher on a push
through the 1st swing resistance. The major trend has turned down with the cross
over back below the 18-day moving average. With the close over the 1st swing
resistance number, the market is in a moderately positive position. The
near-term upside objective is at 8.76. Short-term indicators suggest buying
pullbacks today. The next area of resistance is around 8.72 and 8.76, while 1st
support hits today at 8.60 and below there at 8.51.

 

COTTON MARKET RECAP

4/7/2005

May Cotton finished up 0.34 at 52.22, 0.78 off
the high and 0.12 up from the low.

May cotton bounced higher on the opening and held
the gains for much of the session as export news was a bit better than expected
and traders do not anticipate any bearish demand surprises for the supply/demand
report in the morning. Weekly export sales came in at a solid 206,900 bales as
compared with trade expectations for 150,000-225,000 bales. Cumulative sales
have reached 90.1% of the USDA forecast for the season as compared with 97.7% as
the 5-year average for this time of the year. China was the best buyer for the
week at 113,200 bales. China shipped nearly 91,000 bales to bring total
shipments for the week to 326,300 bales vs. 300,000-400,000 bales expected.

Technical Outlook

COTTON (MAY) 04/08/2005: Stochastics trending
lower at midrange will tend to reinforce a move lower especially if support
levels are taken out. The close below the 18-day moving average is an indication
the longer-term trend has turned down. If yesterday’s gap higher on the day
session chart holds, additional buying could develop this session. The market
has a slightly positive tilt with the close over the swing pivot. The next
downside objective is 51.49. The next area of resistance is around 52.66 and
53.28, while 1st support hits today at 51.77 and below there at 51.49.