Upward Bias Into Friday’s Employment Report?

The overbought condition of the market combined
with increased selling from producers and commercial traders helped trigger the
early sell-off. Fund buying has been the primary bullish force on the move
higher over the past few weeks as fund traders have exited a good portion of the
record net short position and many traders believe that index funds and
inflation-sensitive money managers are building a net long position in grains,
cotton and soft markets this year. The USDA announced a sale of 120,000 tons of
corn to Egypt. Deliveries were hefty again this morning with 1,392 lots posted.
Basis levels in the Midwest were weaker with talk of a sharp rise in farmer
selling this week. In addition, talk that the Argentina corn harvest is underway
renewed trader fears of increased export competition ahead. Support for May corn
comes in at 218 1/2 and 217 with resistance at 224 3/4 and 229 3/4.

Technical Outlook

CORN (MAY) 03/02/2005: 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 market setup is
somewhat negative with the close under the 1st swing support. The next upside
target is 222 1/2. The next area of resistance is around 220 1/2 and 222 1/2,
while 1st support hits today at 218 and below there at 217 1/4.

 

SOY COMPLEX RECAP

3/1/2005

May Soybeans finished down 8 3/4 at 613 1/4, 12
3/4 off the high and 3/4 up from the low. November Soybeans closed down 4 3/4 at
614 1/4. This was 2 1/4 up from the low and 7 3/4 off the high.

May Soymeal closed down 1.4 at 181.6. This was
0.3 up from the low and 3.2 off the high.

March Soybean Oil finished down 0.52 at 22.7,
0.37 off the high and 0.1 up from the low.

The extreme overbought condition of the market
basis traditional technical indicators helped trigger some light speculative
selling early in the session to pressure the market and commercial and producer
selling was also noted. A lack of new fund buying seems to be the primary
bearish force for the market in spite of the lack of rain in the forecast for
the southern Brazil region. The continued stress on the crop in Brazil has
traders lowering their production forecasts for the coming year. Funds were
noted sellers of near 2000 contacts into the mid-session. Brazil exports in
February totaled 413,800 tonnes, down from 453,500 tonnes last year. The first
Asia rust report for the 2005 season was reported in Florida this morning which
may have helped support new crop futures. The University of Florida indicated
that the rust was found on over-wintered foliage of kudzu. Deliveries against
the March soybeans totaled 293 contracts this morning after there were no
deliveries on first notice day yesterday. There was one meal delivered and 82
oil. India cut the base import price for crude soyoil by 14.2% and kept other
edible oil prices unchanged which could help support soyoil imports at the cost
of lower imports for other oils such as palm. Resistance for May soybeans comes
in at 624 1/4 and 638 (50% retracement of the contract high to low move) with
support at 610 3/4 and 608 1/2.

Technical Outlook

BEANS (MAY) 03/02/2005: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The cross over and close above the 18-day moving average indicates the
longer-term trend has turned up. The downside closing price reversal on the
daily chart is somewhat negative. The swing indicator gave a moderately negative
reading with the close below the 1st support number. The next upside objective
is 629 3/4. The market is approaching overbought levels with an RSI over 70. The
next area of resistance is around 620 and 629 3/4, while 1st support hits today
at 606 1/2 and below there at 602 3/4.

MEAL (MAY) 03/02/2005: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. 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 187.5. The market is approaching overbought levels with an RSI
over 70. The next area of resistance is around 185.0 and 187.5, while 1st
support hits today at 181.6 and below there at 180.6.

BEANOIL (MAY) 03/02/2005: 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 market setup is
somewhat negative with the close under the 1st swing support. The near-term
upside objective is at 23.53. The market is becoming somewhat overbought now
that the RSI is over 70. The next area of resistance is around 23.20 and 23.53,
while 1st support hits today at 22.62 and below there at 22.37.

 

WHEAT MARKET RECAP

3/1/2005

May Wheat finished down 7 at 338 1/4, 5 1/4 off the high and 1
1/4 up from the low. July Wheat closed down 7 at 344 1/2. This was 1 1/2 up from
the low and 5 off the high.

The overbought condition of the market and an
increase in producer selling helped to trigger the early sell-off. Funds were
noted sellers of neat 2000 contracts into the mid-session. Midwest cash basis
levels were weaker overnight which helped trigger some light speculative
profit-taking selling and a lack of new fund buying added to the price pressures
of the light selling. Open interest declined into Thursday last week but the
jump in open interest over the past few sessions suggests that fund traders
might be done exiting net short positions and could be building a net long.
Rising open interest in an up market is seen as a positive technical
development. Deliveries were light again today at 73 contracts. Ahead of first
notice day, traders were looking for up to 1000 deliveries. May wheat support
comes in at 334 and 328 with 341 1/2 and 346 1/2 as next resistance.

Technical Outlook

WHEAT (MAY) 03/02/2005: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The cross over and close above the 18-day moving average is an
indication the longer-term trend has turned positive. The market setup is
somewhat negative with the close under the 1st swing support. The next upside
target is 345 3/4. With a reading over 70, the 9-day RSI is approaching
overbought levels. The next area of resistance is around 341 1/2 and 345 3/4,
while 1st support hits today at 335 and below there at 332 3/4.

 

LIVE CATTLE RECAP

3/1/2005

April Live Cattle finished up 0.45 at 86.50, 0.40
off the high and 0.30 up from the low.

March Feeder Cattle closed up 0.82 at 99.97. This
was 0.57 up from the low and 0.15 off the high.

The market experienced solid gains with help from
renewed fund buying interest, higher beef prices and expectations for a higher
cash market this week. In addition, the market found support from the idea that
the Canadian border opening impact may not be as burdensome as anticipated with
trade expectations that initial Canadian sales will be light. The USDA Secretary
of Agriculture indicated that Japan seeks more data before re-establishing trade
with the US which might delay the resumption of trade. Boxed-beef cut-out values
at mid-session were up $.48 to $141.07 as compared with $138.67 last week.
Slaughter came in at 120,000 head from trade expectations for 115,000-120,000
head.

Technical Outlook

CATTLE (APR) 03/02/2005: 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 close under the 18-day moving average indicates the longer-term
trend could be turning down. The close over the pivot swing is a somewhat
positive setup. The near-term upside target is at 87.220. The next area of
resistance is around 86.850 and 87.220, while 1st support hits today at 86.170
and below there at 85.850.

 

LEAN HOGS RECAP

3/1/2005

April Lean Hogs finished up 1.02 at 75.25, 0.45
off the high and 0.75 up from the low.

March Pork Bellies closed up 1.92 at 90.02. This
was 1.52 up from the low and 0.02 off the high.

The hog market pushed sharply higher on the
session with June moving to a new contract high as expectations for continued
strong demand and hopes that production falls off into the spring helped support
renewed speculative buying. Higher pork cut-out values helped support renewed
fund buying and triggered small speculator short-covering. An increase in the
speculative trading limits may have helped support the renewed fund buying and
the last Commitment-of-Traders report showed the market in a classic bullish
set-up. For the weekly cold storage report, released this afternoon, traders are
looking for an in-movement of 1.2 to 2.0 million pounds. The 2-day lean index
for the period ending February 25th came in at 70.49, up.33 on the session and
up from 67.64 last week. Slaughter came in at 384,000 head from trade
expectations for 382,000-396,000 head.

Technical Outlook

HOGS (APR) 03/02/2005: The major trend could be
turning up with the close back above the 40-day moving average. 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. There
could be more upside follow through since the market closed above the 2nd swing
resistance. The next upside target is 76.370. The next area of resistance is
around 75.820 and 76.370, while 1st support hits today at 74.650 and below there
at 74.000.

 

COCOA MARKET RECAP

3/1/2005

May Cocoa finished up 22 at 1752, 2 off the high
and 32 up from the low.

The cocoa market followed yesterday’s big rally
day with another strong performance today, as May futures closed 20 higher on
the day and traded to a new 15-week high. Political and labor problems out of
the Ivory Coast have dominated the news lately. A resumption of hostilities
between government sided militia and rebel groups got the market heated up
yesterday. Cocoa farmers are now planning to out on strike Thursday as their
talks with industry groups have gotten nowhere. Funds were buyers of an
estimated 3,000 to 4,000 contracts. With the main crop mostly complete, the
trade is watching for progress on the mid-crop, which is expected to start
harvesting in April. Dry weather in the latter part of February is sparking some
mild interest and/or concern about the crop’s potential.

Technical Outlook

COCOA (MAY) 03/02/2005: Rising stochastics at
overbought levels warrant some caution for bulls. The cross over and close above
the 18-day moving average is an indication the longer-term trend has turned
positive. The market has a slightly positive tilt with the close over the swing
pivot. The next upside objective is 1778. The market is becoming somewhat
overbought now that the RSI is over 70. The next area of resistance is around
1769 and 1778, while 1st support hits today at 1735 and below there at 1711.

 

COFFEE MARKET RECAP

3/1/2005

May Coffee closed down 0.10 at 121.45. This was
0.85 up from the low and 1.15 off the high.

May coffee closed 10 lower with a quiet inside
trading session. Weakness in London and a set-back in many commodity markets
kept fund buyers on the sidelines. On the other hand, sellers were also slow to
enter the market. A lack of producer selling in Vietnam do to drought fears has
kept commercial sellers quiet. Weather in Brazil has supported soybeans but good
rains in the northern Brazil coffee producing areas should keep the crop
conditions favorable for the 2005/2006 season. Fears of long liquidation selling
from fund traders has kept the market jittery and buyers a little more patient
after the weekly reversal from a 5-year peak last week.

Technical Outlook

COFFEE (MAY) 03/02/2005: Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. The market now above the 18-day moving average suggests the longer-term
trend has turned up. With the close higher than the pivot swing number, the
market is in a slightly bullish posture. The next downside objective is 119.55.
The next area of resistance is around 122.45 and 123.50, while 1st support hits
today at 120.50 and below there at 119.55.

 

SUGAR MARKET RECAP

3/1/2005

May Sugar closed down 0.11 at 9.06. This was 0.01
up from the low and 0.19 off the high.

The sugar market opened higher on the session but
a set-back in the CRB index and weakness in London sugar futures helped trigger
a sell-off into the mid-session. Trade house buying helped support the market on
a test of psychological support near 9.00 for May futures. Ideas that China may
begin to import sugar soon helped provide underlying support. Thailand cane
crushed between the start of the season on November 23rd and February 28th
reached 45.66 million tons as compared with 48.4 million tons last year. Traders
expect total cane output for the 2004/2005 season to reach just 47-48 million
tons as compared with 64.48 million tons last year. Drought in the cane regions
with a lack of rains since September is the primary reason for the expected
short-fall. Some areas of Sao Paulo, Brazil received rains this weekend but
areas which did not are seeing increasing stress this week with mostly dry
weather expected for this week.

Technical Outlook

SUGAR (MAY) 03/02/2005: 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 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 next downside
objective is now at 8.91. The next area of resistance is around 9.16 and 9.30,
while 1st support hits today at 8.96 and below there at 8.91.

 

COTTON MARKET RECAP

3/1/2005

May Cotton finished down 0.68 at 50.59, 0.61 off
the high and 0.89 up from the low.

Similar to other commodity markets, the cotton
market ran out of bullish fuel from fund buyers and the market set-back to close
lower due to talk of an overbought condition. In addition, fears that a
continued rally could eat into the demand base for cotton helped to pressure.
Traders feel that higher prices, with May futures over 50 for the first time
since October, may limit the near-term demand from China helped to pressure the
market as well. Weakness in the CRB Index and talk of hefty stocks helped to
pressure. In addition, talk of good soil moisture in Texas going into the spring
planting season helped to pressure new crop futures with more rain expected in
Texas high plains for Friday. An increase in producer selling this week added to
the bearish tone.

Technical Outlook

COTTON (MAY) 03/02/2005: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The cross over and close above the 18-day moving average is an
indication the longer-term trend has turned positive. The market setup is
somewhat negative with the close under the 1st swing support. The near-term
upside target is at 52.02. The market is becoming somewhat overbought now that
the RSI is over 70. The next area of resistance is around 51.34 and 52.02, while
1st support hits today at 49.84 and below there at 49.02.