USDA Briefing On Mad Cow…

Technical Outlook

#BONDS (SEP) 07/01/04: Since the close was above
the 2nd swing resistance number, the market’s posture is bullish and could see
more upside follow-through early in the session. Near-term resistance for bonds
is at 107.11 and then again at 107.25, while swing support hits at 105.29 and
below there at 104.29. The market’s close above the 9-day moving average
suggests the short-term trend remains positive. The daily stochastics have
crossed over up which is a bullish indication. The next upside target is 107.25.

T-NOTES(SEP) The daily stochastics gave a bullish
indicator with a crossover up. The near-term upside objective is at 110.09. The
market’s close above the 2nd swing resistance number is a bullish indication.
Near-term resistance for the T-Notes is at 110.01 and then again at 110.09,
while swing support hits at 109.01 and below there at 108.09. The market’s
short-term trend is positive on a close above the 9-day moving average.

 

STOCK INDICES RECAP

6/30/2004

The stock market mostly marked time ahead of the
FOMC meeting. At times, the softer than expected U.S. economic information
seemed to undermine the trade and promote light profit-taking. However the
market did manage on several occasions to track back towards unchanged to higher
ground on the day and that suggests available buying power is sitting on the
sidelines. Some equity market traders were discouraged by the soft U.S. numbers
and with expectations for more soft readings on Thursday, the optimistic macro
economic outlook is tempered somewhat. Maybe the FOMC decision suggests to the
equity market that the economy really isn’t ultra strong and that probably
caused some buyers to pull back from the market.

Technical Outlook

#S&P500 (SEP) 07/01/04: With the close over the
1st swing resistance number, the market is in a moderately positive position.
Underlying support comes in at 1135.55 and 1128.68, with overhead resistance at
1146.85 and 1151.28. The market’s short-term trend is positive on a close above
the 9-day moving average. Momentum studies trending lower at mid-range should
accelerate a move lower if support levels are taken out. The next downside
objective is now at 1128.68.

S&P E-Mini (SEP): Momentum studies trending lower
at mid-range could accelerate a price break if support levels are broken. The
next downside objective is 1128.38. The market has a slightly positive tilt with
the close over the swing pivot. Near-term resistance for the S&P Mini is at
1146.75 and then again at 1151.38, while swing support hits at 1135.25 and below
there at 1128.38. A negative signal for trend short-term was given on a close
under the 9-bar moving average.

NASDAQ (SEP) The market’s close above the 9-day
moving average suggests the short-term trend remains positive. Since the close
was above the 2nd swing resistance number, the market’s posture is bullish and
could see more upside follow-through early in the session. The market should run
into resistance at 1533.25 and above there at 1542.13 with support at 1510.75
and 1497.13. Studies are showing positive momentum, but are now in overbought
territory so some caution is warranted. The next upside target is 1542.1.

MINI DOW (SEP) The market’s close above the 9-day
moving average suggests the short-term trend remains positive. The market should
run into resistance at 10481 and above there at 10520 with support at 10383 and
10324. Negative momentum studies in the neutral zone will tend to reinforce
lower price action. The next downside target is 10324. With the close higher
than the pivot swing number, the market is in a slightly bullish posture.

 

CURRENCY MARKET RECAP

6/30/2004

The Dollar index performed poorly in the early
action Wednesday and because that performance followed a rather impressive
action in the prior session, recent bulls have to be disappointed. In other
words, the U.S. economic statistics on Wednesday were disappointing for the
Dollar but the real focal point of the day was the FOMC meeting decision. The
FOMC decision to raise interest rates 25 basis points suggests that the go-slow
approach is still in effect and that simply fails to give the Dollar enough
information to turn off recent selling pressure. Therefore, the status quo would
seem to be maintained and the status quo in the Dollar is a negative condition.

Technical Outlook

#CURRENCIES 07/01/04: YEN (SEP): The market’s
close below the 9-day moving average is an indication the short-term trend
remains negative. The gap lower price action on the day session chart is a
bearish indicator for trend. The swing indicator gave a moderately negative
reading with the close below the 1st support number. Swing resistance is
targeted at 92.57 and above there at 92.78, with the yen finding support around
91.84 and below there at 91.32. 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 next downside target is 91.32. Short-term
indicators on the defensive. Consider selling an intraday bounce.

EURO (SEP): Momentum studies are trending higher
from mid-range which should support a move higher if resistance levels are
penetrated. The near-term upside objective is at 1.2226. The market is in a
bearish position with the close below the 2nd swing support number. Swing
support for the Euro comes in at 1.2118, with overhead resistance at 1.2226.
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 gap down on the day
session chart is bearish with more selling pressure possible today.

 

PRECIOUS METALS RECAP

6/30/2004

The gold market behaved somewhat impressively
early in the session on Wednesday and did so because of weakness in the U.S.
dollar. The net result of the FOMC meeting is that interest rates have been
raised slightly but the status quo is seemingly maintained in the US and that
simply isn’t enough to provide the Dollar with an overset to existing negative
sentiment. One has to think that the macro economic uncertainty has also
declined off the losses in the energy complex and with less uncertainty in Iraq
it is very disappointing that that the Dollar hasn’t come back into favor. In
short the trade wants to stay negative toward the Dollar and means the key
component in gold is supportive. With silver and platinum rising along with gold
it would seem that sentiment in all the metals is positive.

Technical Outlook

#P-METALS 07/01/04: SILVER (SEP): The swing
indicator gave a moderately negative reading with the close below the 1st
support number. Initial support for silver is at 565.3 and below there at 554.9
with resistance likely at 586.2 and 593.8. The market’s close below the 9-day
moving average is an indication the short-term trend remains negative. Negative
momentum studies in the neutral zone will tend to reinforce lower price action.
The next downside target is 554.9. Short-term indicators on the defensive.
Consider selling an intraday bounce. The outside day down and close below the
previous day’s low is a negative signal. The downside closing price reversal on
the daily chart is somewhat negative.

GOLD (AUG): Support for gold today comes in near
389.03, while resistance is pegged at 398.83. Momentum studies trending lower at
mid-range should accelerate a move lower if support levels are taken out. The
next downside objective is now at 389.03. The market’s close below the pivot
swing number is a mildly negative setup. The market’s short-term trend is
negative as the close remains below the 9-day moving average.

 

COPPER MARKET RECAP

6/30/2004

The copper market appeared to get direct follow
through support from the idea of strike in Chile. While the Union has to
actually wait for a certain period before stopping work the market is willing to
make push prices up off the issue. However, it is surprising that prices managed
to run up so aggressively, considering that the macro economic condition in the
US softened in the reports Wednesday and the US Fed hiked interest rates. So far
the copper market hasn’t made a big issue out of the fact that China at remains
out of the spotlight with respect to cash purchases and that is something that
makes recent gains seem suspect. The trade also discounted stories from Chile
that May copper output rose by 10.8% on the year, to 450,650 tons. In the end,
one can hardly ignore the threat of a strike in Chile, but at the same time the
market would seem to be overreacting.

 

ENERGY MARKET RECAP

6/30/2004

The energy markets managed an impressive
short-covering bounce, mostly because the weekly mature statistics showed a
decline in API crude and unleaded gas stocks. However the DOE statistics showed
no change in unleaded stocks and a minimal decline in crude oil stocks.
Therefore, the weekly inventory statistics were somewhat supportive, but would
not appear to be of a nature that would completely turn the recent downtrend
pattern around. With OPEC oil ministers suggesting that energy prices are set to
stabilize, we suspect that some of the aggressive downside selling action might
taper off. With the brunt of the summer driving season still ahead and U.S.
gasoline stocks somewhat tight, the unleaded market might have forged a solid
low with this week’s action. However comments from the Saudi oil minister, that
Saudi Arabia could sustain 10.5 million barrels per day of output and that an
issue that scares off would-be buyers.

Technical Outlook

#ENERGIES 07/01/04: CRUDE OIL (AUG): The market’s
close above the 2nd swing resistance number is a bullish indication. Support for
crude is keyed on 36.33 and below there at 35.26, with resistance pegged at
37.78 and 38.16. The market’s short-term trend is negative as the close remains
below the 9-day moving average. Daily stochastics are trending lower, but have
declined into oversold territory. The next downside objective is now at 35.26.

UNLEADED GAS (AUG): Negative momentum studies in
the neutral zone will tend to reinforce lower price action. The next downside
target is 110.67. Since the close was above the 2nd swing resistance number, the
market’s posture is bullish and could see more upside follow-through early in
the session. Resistance today is at 120.57, while support should be found around
110.67. The market’s close below the 9-day moving average is an indication the
short-term trend remains negative.

HEATING OIL (AUG): The market’s close above the
2nd swing resistance number is a bullish indication. Heating oil should
encounter support around 95.60, with resistance is at 106.10. The market’s
short-term trend is positive on a close above the 9-day moving average. The
major trend could be turning up with the close back above the 40-day moving
average. Momentum studies trending lower at mid-range should accelerate a move
lower if support levels are taken out. The next downside objective is now at
95.60. The outside day up is a positive signal. The upside closing price
reversal on the daily chart is somewhat bullish.

 

CORN MARKET RECAP

6/30/2004

The USDA pegged June 1st stocks at 2.97 billion
bushels as compared with the average trade estimate of 2.96 billion bushels
(range 2.921-3.029) and compared with 2.985 billion last year. For planted
acreage, the USDA pegged plantings at 80.97 million acres as compared with the
average trade estimate of 80.31 million acres (range 79.79-81.2) as compared
with 79.00 million acres from the March USDA report and 78.74 million last year.
The negative news combined with a bearish weather forecast into mid-July helped
to trigger more aggressive long liquidation selling from fund traders who were
thought to be still holding a hefty net long position into the reports.
Deliveries came in at 863 contracts as compared with 0-200 expected which added
to the bearish tone. Traders are nervous that producer selling of old crop corn
will increase once the crop is pollinated. The International Grain Council
pegged world coarse grain production for the 2004/2005 season at 942 million
tons, up 4 million from last months estimate and up from 907 million tons
produced last year. Consumption is pegged at 949 million tons. For the weekly
export sales report, released before the opening, traders are looking for sales
near 500,000-700,000 tons as compared with 348,600 tons last week. The next
downside swing objective on this weeks downside break-out comes in at 261 1/4
with resistance for December corn at 271 and 276.

Technical Outlook

#CORN (DEC) 07/01/04: Daily stochastics are
trending lower, but have declined into oversold territory. The next downside
objective is now at 261. The market is in a bearish position with the close
below the 2nd swing support number. Market resistance comes in at 274 today,
with support at 261. The market’s short-term trend is negative as the close
remains below the 9-day moving average. With a reading under 30, the 9-day RSI
is approaching oversold levels. The gap down on the day session chart is bearish
with more selling pressure possible today.

 

SOY COMPLEX RECAP

6/30/2004

August soybeans broke out to the downside early
in the session but closed back into the 1-month consolidation which may be seen
as a positive development. The USDA pegged June 1st stocks at 409.5 million
bushels as compared with the average trade estimate of 399 million bushels
(range 362-455) and compared with 602 million last year. For planted acreage,
the USDA pegged plantings at 74.81 million acres as compared with the average
trade estimate of 74.96 million acres (range 74.2-76.0) as compared with 75.4
million acres from the March USDA report and 73.4 million last year. The weather
became the focus of attention shortly after the opening and fund traders were
active at liquidating long position. The lack of deliveries in oil was seen as
support and the lack of deliveries in meal and soybeans was expected. An extra
10 million bushels of soybeans on hand at the end of the season helped turn the
psychology bearish but cash markets will be watched closely in the days just
ahead as the tight situation and a lack of soybeans to crush could keep the old
crop futures very volatile. A USDA spokesman told Reuters today that there will
be no changes to the current import policy for soybeans due to Industry concerns
over the spread of Asian rust into the US. This may increase concerns over the
potential import of soybeans into the US in the months just ahead. For the
weekly export sales report, released before the opening, traders are looking for
soybean sales near 50,000-100,000 tons, meal sales near 10,000-50,000 tons and
oil sales at 0-5,000 tons. November soybean support levels come in at 659 and
653 1/2 with 683 3/4 as resistance.

Technical Outlook

#SOYBEANS (NOV) 07/01/04: The close below the 2nd
swing support number puts the market on the defensive. The next area of
resistance is around 687 1/2 and 711 1/2, while 1st support hits today at 650
and below there at 636 1/2. The market’s close below the 9-day moving average is
an indication the short-term trend remains negative. The daily stochastics have
crossed over down which is a bearish indication. The next downside target is 636
1/2.

MEAL (DEC): The daily stochastic’s gave a bearish
indicator with a crossover down. The next downside objective is now at 194.4.
The gap down on the day session chart is bearish with more selling pressure
possible today. First resistance comes in at 211.8, with support at 198.8. 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.

BEAN OIL (DEC): The market’s close below the
9-day moving average is an indication the short-term trend remains negative.
Positive momentum studies in the neutral zone will tend to reinforce higher
price action. The next upside target is 25.79. The swing indicator gave a
moderately negative reading with the close below the 1st support number. Daily
swing resistance is found at 25.00 and above there at 25.79. Support should be
encountered at 23.92 and 23.63. The close under the 40-day moving average
indicates the longer-term trend could be turning down.

 

WHEAT MARKET RECAP

6/30/2004

The higher close in July wheat after the gap
lower opening could be seen as a bullish technical development for the wheat
market. The USDA pegged June 1st stocks at 546 million bushels as compared with
the average trade estimate of 537 million bushels (range 522-549) as compared
with 491 million last year. For planted acreage, the USDA pegged spring wheat
plantings at 13.68 million acres as compared with the average trade estimate of
13.26 million acres (range 12.9-13.5) as compared with 13.84 million acres last
year. All wheat acreage was pegged at 59.87 million acres vs. trade estimates at
59.416 million acres and the March USDA forecast of 59.462 million and 61.7
million acres last year. Stocks and plantings were higher than expected and fund
selling helped trigger the gap lower opening to the lowest level since October
27th. Deliveries were higher than expected at 1609 contracts which added to the
bearish tone and weakness in corn was also seen as a bearish force. The
International Grain Council pegged world production for the 2004/2005 season at
602 million tons, up 3 million from last months estimate and up from 554 million
tons produced last year. Consumption is pegged at 603 million tons. Wheat stocks
from the worlds 5 major exporters was seen at 46 million tons as compared with
last months estimate of 49 million tons but still up from 42 million tons last
year. For the weekly export sales report, released before the opening, traders
are looking for sales near 300,000-500,000 tons as compared with 440,000 tons
last week. Support for September wheat comes in at 343 and 339 with 352 1/4 and
361 as resistance.

Technical Outlook

#WHEAT (DEC) 07/01/04: The swing indicator gave a
moderately negative reading with the close below the 1st support number. Look
for near-term support at 353 and below there at 347 1/2, with resistance levels
at 361 1/4 and 364. The market’s close below the 9-day moving average is an
indication the short-term trend remains negative. Daily stochastics are showing
positive momentum from oversold levels which should reinforce a move higher if
near-term resistance is taken out. The next upside target is 364.

 

LIVE CATTLE RECAP

6/30/2004

August cattle closed 212 lower on the session but
closer to the highs of the day than the lows. News of a 2nd animal with a
inconclusive test in the quick test for mad cow helped to trigger the early
collapse and gap below the 40-day moving average. The USDA announced plans for a
briefing at 3:30 cdt to update on the mad cow situation and traders speculated
that the results of the final test on the first animal would be released. Rumors
on the floor suggested that the first animal was a young heifer so the rally
yesterday may have been based on ideas that the animal will test negative.
However, rumors on the second animal suggest an 8 year old cow so the odds of a
positive were seen as higher. For the third session in a row, slaughter was
lower than expected which should support beef prices but is seen as a bearish
indicator for packer demand. Boxed-beef cut-out values were down $.57 to $144.82
as compared with $144.71 last week at this time.

Technical Outlook

#CATTLE (AUG) 07/01/04: The daily stochastics
have crossed over down which is a bearish indication. The next downside target
is 84.27. The swing indicator gave a moderately negative reading with the close
below the 1st support number. Short-term indicators on the defensive. Consider
selling an intraday bounce. Support should be encountered at 85.07 and below
there at 84.27. Market resistance is at 86.45 and then again at 87.02. The gap
lower price action on the day session chart is a bearish indicator for trend.
The market’s close below the 9-day moving average is an indication the
short-term trend remains negative.

 

LEAN HOGS RECAP

6/30/2004

The market closed higher led by July futures as
the discount of futures to the cash market and ideas that pork exports would
remain high due to potential mad cow problems in the US and another bird flu
problem in Vietnam supported speculative buying. Peoria hogs were $1.00 lower
and the 2-day lean index began to slip. The Index for the period ending June
28th was down 17 cents to 81.64 as compared with 79.97 last week at this time.
Weekly average weights for the week ending June 26th came in at 262.1 pounds as
compared with 262.8 pounds the previous week and 259.9 pounds last year. August
bellies closed lower and to the lowest level since June 17th due to the bearish
news from the weekly cold storage report.

Technical Outlook

#HOGS (AUG) 07/01/04: With the close over the 1st
swing resistance number, the market is in a moderately positive position.
Resistance levels comes in at 77.30 and 77.72 today, while support is around
76.07 and then 75.27. Consider buying pull-backs since daily studies are
bullish. The market’s short-term trend is positive on a close above the 9-day
moving average. The daily stochastics gave a bullish indicator with a crossover
up. The near-term upside objective is at 77.72.

 

COCOA MARKET RECAP

6/30/2004

The cocoa market posted a massive range on
Wednesday and finished in a very negative technical posture. While the market
held the 1335 critical support level, the magnitude of the range and the poor
close could project follow through selling on Thursday. The trade reported both
origin and fund selling on the higher opening Wednesday and that appeared to
result in a series of stop-loss sell orders flooding the pit. Some traders think
that the technical action was so poor, that a test of contract lows is due in
the near term. The trade is aware that rebel negotiators have rejected peace
talks with the Ivory Coast but that apparently isn’t pulling in speculative
buyers. Therefore, but even the political situation is unable to deter fresh
selling in cocoa.

Technical Outlook

COCOA (SEP) 07/01/04 The outside day down and
close below the previous day’s low is a negative signal. The downside closing
price reversal on the daily chart is somewhat negative. There could be some
early pressure today given the market’s negative setup with the close below the
2nd swing support. Cocoa should run into resistance at 1378 and above there at
1429 with support at 1305 and 1283. Positive momentum studies in the neutral
zone will tend to reinforce higher price action. The next upside target is
1429.25.

 

COFFEE MARKET RECAP

6/30/2004

September coffee closed 140 higher on the session
as the mild weather forecast and the lower opening failed to attract new selling
interest and short-covering occurred. Brazil forecasters see mostly dry weather
and a lack of cold weather in the next 10 days. July futures in London closed
sharply lower but September was up slightly. Ideas that futures are oversold and
that speculative longs may be almost totally out of the market helped to
support. A lack of selling interest from producers provided some support but a
lack of new buying interest is seen as keeping a lid on short-covering rallies.
CSCE stocks were up 1,080 bags to 4.994 million bags with 118,470 bags pending
review.

Technical Outlook

COFFEE (SEP) 7/1/04 The outside day up and close
above the previous day’s high is a positive signal. The daily closing price
reversal up is positive. The market setup is supportive for early gains with the
close over the 1st swing resistance. The daily stochastics have crossed over up
which is a bullish indication. The near-term upside objective is at 77.20. The
Coffee contract should run into resistance at 76.50 and above there at 77.20
with support at 74.1 and 72.40. The market’s short-term trend is negative as the
close remains below the 9-day moving average.

 

SUGAR MARKET RECAP

6/30/2004

The sugar market pushed lower on the session as a
late sell-off in London, a lack of trade in cash markets and light trade house
selling helped to pressure. Fund traders have been the best buyers recently and
this group was absent as well which added to the more negative tone. The trade
continues to believe that the longer-term fundamentals should support higher
prices ahead but the major world buyers are still quiet and the recent jump in
prices has made routine buyers move to the sidelines as well. Libya postponed a
tender to buy 100,000 tons of white sugar yesterday. A dry trend during June in
parts of Ukraine and Belarus along with a dry forecast for the next week may
begin to provide support soon if the beet crop begins to suffer. July futures
expired today at 7.24 and traders await deliveries which are expected to come in
near the 100,000-300,000 range.

Technical Outlook

#SUGAR (OCT) 07/01/04: The market’s close below
the pivot swing number is a mildly negative setup. Swing resistance comes in at
7.88, with support found at 7.46. The market’s short-term trend is positive on a
close above the 9-day moving average. Momentum studies are trending higher, but
have entered overbought levels. The near-term upside objective is at 7.88.

 

COTTON MARKET RECAP

6/30/2004

December cotton closed 155 lower on the session
but up nearly 100 points from the lows of the day. Ideas that crop conditions
are improving and bearish news from the USDA helped to trigger the early
collapse. The USDA pegged planted acreage at 13.947 million acres as compared
with the average trade estimate at 13.73 million acres (range 13.4-13.9). The
acreage was above the high end of trade expectations and compares with 14.4
million acres projected in the March intentions report and 13.5 million last
year. For the weekly export sales report, released before the opening, traders
are looking for sales near 200,000-300,000 bales as compared with 259,600 bales
last week.

Technical Outlook

#COTTON (OCT) 07/01/04: The market’s close below
the 9-day moving average is an indication the short-term trend remains negative.
The close below the 2nd swing support number puts the market on the defensive.
Next resistance area comes in at 52.05 and then again at 52.83, while support is
targeted at 50.35 and 49.43. The daily stochastics have crossed over down which
is a bearish indication. The next downside target is 49.43. The sell-off took
the market to a new contract low.