What’s Behind The Spike In Corn

Technical Outlook

BONDS (MAR) 01/13/04: With the close higher than the pivot swing number, the market is in a slightly bullish posture. Near-term resistance for bonds is at 111.26 and then again at 112.13, while swing support hits at 110.25 and below there at 110.11. The market’s close above the 9-day moving average suggests the short-term trend remains positive. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 112.13.

T-NOTES(MAR) Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 114.22. It is a mildly bullish indicator that the market closed over the pivot swing number. The major trend is down with the cross over back below the 40-day moving average. Near-term resistance for the T-Notes is at 114.10 and then again at 114.22, while swing support hits at 113.19 and below there at 113.09. The market’s short-term trend is positive on a close above the 9-day moving average.

STOCK INDICES RECAP

1/12/04

The stock market continued to bulldog its way higher despite slack macro economic information and soaring Treasury prices. Maybe a firmer Dollar sparked some international buyers to step up for US stocks because prices Monday were markedly cheaper to foreign investors than they were last week. We would have expected the market to have difficult time Monday considering that the economic reports were once again disappointing. New year pension fund buying or January effect buying might be providing the market ongoing interest regardless of the ebb and flow of the economic outlook.

Technical Outlook

S&P500 (MAR) 01/13/04: With the close over the 1st swing resistance number, the market is in a moderately positive position. Underlying support comes in at 1124.15 and 1117.63, with overhead resistance at 1132.85 and 1135.03. The market’s short-term trend is positive on a close above the 9-day moving average. Momentum studies are trending lower from high levels which should accelerate a move lower on a break below the 1st swing support. The next downside objective is now at 1117.63. With a reading over 70, the 9-day RSI is approaching overbought levels.

S&P E-Mini (MAR): The market made a new contract high on the rally. The daily closing price reversal up is a positive indicator that could support higher prices. Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The next downside objective is 1115.69. The market setup is supportive for early gains with the close over the 1st swing resistance. Near-term resistance for the S&P Mini is at 1133.63 and then again at 1136.19, while swing support hits at 1123.38 and below there at 1115.69. A positive signal for trend short-term was given on a close over the 9-bar moving average. The market is approaching overbought levels with an RSI over 70.

NASDAQ (MAR) The market’s close above the 9-day moving average suggests the short-term trend remains positive. A positive setup occurred with the close over the 1st swing resistance. The market should run into resistance at 1557.50 and above there at 1564.25 with support at 1531.50 and 1512.25. The 9-day RSI over 70 indicates the market is approaching overbought levels. The daily stochastics have crossed over up which is a bullish indication. The next upside target is 1564.3.

CURRENCY MARKET RECAP

1/12/04

A major reversal in the Dollar raised some eyebrows Monday, as US numbers continued to be soft while European numbers were strong. While there is background talk about possibly coordinated intervention we see no direct evidence to suspect that intervention is possible from anyone but the BOJ. In order to turn some technical conditions around the March Euro would have to manage a close back above 128.50.

Technical Outlook

YEN (MAR): The market’s close below the 9-day moving average is an indication the short-term trend remains negative. It is a slightly negative indicator that the close was lower than the pivot swing number. Swing resistance is targeted at 94.08 and above there at 94.28, with the yen finding support around 93.77 and below there at 93.66. 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 93.66.

EURO (MAR): Momentum studies are trending lower from high levels which should accelerate a move lower on a break below the 1st swing support. The next downside objective is now at 1.2667. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.2667, with overhead resistance at 1.2825. The market’s short-term trend is positive on a close above the 9-day moving average. The gap down on the day session chart is bearish with more selling pressure possible today.

PRECIOUS METALS RECAP

1/12/04

The silver outperformed the gold market in the action Monday partly because of a recovery in the Dollar and partly because of comments from the Bundesbank that they might consider selling some gold to fund research projects. The silver seemed to be massive fund buying interest and would seem to be the precious metals leader. Maybe silver is getting spillover interest from the base metals tightness argument. In it also possible that labor issues might be sparking fears in silver, as mining operations worldwide are being hit for higher wages probably because the workers see improving profit margins within the industry.

Technical Outlook

SILVER (MAR): With the close higher than the pivot swing number, the market is in a slightly bullish posture. Initial support for silver is at 653.7 and below there at 646.4 with resistance likely at 664.0 and 669.7. The market’s close above the 9-day moving average suggests the short-term trend remains positive. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 664.0. The 9-day RSI over 70 indicates the market is approaching overbought levels. A new contract high was made on the rally. The gap upmove on the day session chart is a bullish indicator for trend.

GOLD (APR): Support for gold today comes in near 423.13, while resistance is pegged at 431.33. Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 431.33. It is a mildly bullish indicator that the market closed over the pivot swing number. The market’s short-term trend is positive on a close above the 9-day moving average. With a reading over 70, the 9-day RSI is approaching overbought levels.

COPPER MARKET RECAP

1/12/04

The copper market faded aggressively partly because the macro economic fundamentals have deteriorated but mostly because the market was simply exhausted from a technical perspective. Some traders were concerned that the Highland Valley situation might be solved overnight thereby leaving the market vulnerable to additional profit taking. The trade could have been undermined by news that a small Codelco facility had ended its labor dispute. We also have to think that a positive Dollar sparked some liquidation by the arbitrage trade in copper.

ENERGY MARKET RECAP

1/12/04

The energy complex is a little overbought and with the weather mostly normal the buyers were unwilling to chase prices. During the session the Nigerian oil Minister suggested that supplies were so tight that no production cut would be needed from OPEC in the February meeting. The Nigerian Oil Minister also went on to suggest that OPEC might consider sanctions against those members over producing and that countervails the statement that no cut would be needed. In other words, fundamentals are tight enough that OPEC no longer fears a supply glut in the second quarter.

Technical Outlook

CRUDE OIL (MAR): The outside day up is a positive signal. The rally brought the market to a new contract high. The upside closing price reversal on the daily chart is somewhat bullish. With the close over the 1st swing resistance number, the market is in a moderately positive position. Support for crude is keyed on 33.90 and below there at 33.20, with resistance pegged at 34.90 and 35.20. 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 35.20. With a reading over 70, the 9-day RSI is approaching overbought levels.

UNLEADED GAS (MAR): Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 104.01. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Resistance today is at 104.01, while support should be found around 99.21. The market’s close above the 9-day moving average suggests the short-term trend remains positive. The 9-day RSI over 70 indicates the market is approaching overbought levels.

HEATING OIL (MAR):It is a mildly bullish indicator that the market closed over the pivot swing number. Heating oil should encounter support around 95.44, with resistance is at 101.24. 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 101.24. With a reading over 70, the 9-day RSI is approaching overbought levels. The rally brought the market to a new contract high. The upside closing price reversal on the daily chart is somewhat bullish.

CORN MARKET RECAP

1/12/04

May corn closed 13 1/2 higher on the session and into new contract highs. The USDA pegged Crop Production at 10.114 billion bushels as compared with the average trade estimate of 10.297 billion. In November, the USDA forecast was 10.278 billion bushels. This is still an all-time record high. December 1st stocks were pegged at 7.945 billion bushels as compared with the average trade estimate of 8.2 billion bushels (range 8.1-8.33). Ending stocks for the 2003/2004 season are now pegged at 981 million bushels as compared with the average trade estimate of 1.252 billion and the December USDA forecast of 1.299 billion bushels. While US production is a record high, ending stocks are now pegged at their lowest since the 1996/97 crop year. The stocks/usage ratio at just 9.6% is the lowest since 1995/96 (record high prices) and the second lowest in 29 years. World ending stocks for corn were pegged at 67.5 million tons as compared with 74.2 million tons last month, 102.3 million last year and 171.47 million tons in the 99/00 crop season. This is the lowest world ending stocks since 1975/76 season. The stocks/usage ratio of 10.5% for the world is the lowest on record (our records go back to 1961). The USDA raised feed usage by 75 million bushels from last month’s forecast, industrial usage by 30 million bushels and exports by 50 million bushels for a total usage of 10.230 billion bushels.

Technical Outlook

CORN (MAR) 01/13/04: Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 271 1/4. The market’s close above the 2nd swing resistance number is a bullish indication. Market resistance comes in at 271 1/4 today, with support at 259 1/4. The market’s short-term trend is positive on a close above the 9-day moving average. With a reading over 70, the 9-day RSI is approaching overbought levels. The rally brought the market to a new contract high. The gap up on the day session chart gave a bullish indicator and more follow through could be seen this session.

SOY COMPLEX RECAP

1/12/04

The soybean market closed sharply higher and into new contract highs with March up 29 3/4 cents on the session. The USDA pegged production at 2.418 billion bushels as compared with trade expectations at 2.451 billion bushels and the December USDA forecast of 2.452. December 1st stocks were pegged at 1.686 billion bushels as compared with the average trade estimate of 1.75 billion bushels (range 1.723-1.799). This is 427 million bushels below last year on December 1st (2002) and suggests extremely tight stocks for the rest of the season. Keep in mind, ending stocks are expected to be down just 53 million bushels from last year. Ending stocks were pegged at 125 million bushels as compared with the average trade estimate at 111 million bushels. March Oil was up 134 on the session. Ending stocks were lowered to just 1.006 billion pounds from 1.49 billion last year and 2.36 billion two years ago. Ending stocks have not been less than 1 billion pounds since 1985, and the stocks usage ratio at just 5.8% has not been lower since the 5.5% level seen in 1984 and 1964. The May 1984 soybean oil moved from a low of near 25.50 in February to a high of 41.15 on May 18th, 1984. World ending stocks for Oil were pegged at 1.63 million tons from 1.79 million tons last year, 2.57 for the 2001/2002 season and 2.72 million tons in 2000/2001.

Technical Outlook

SOYBEANS (MAR) 01/13/04: A new contract high was made on the rally. The gap upmove on the day session chart is a bullish indicator for trend. 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 next area of resistance is around 828 and 833 1/2, while 1st support hits today at 817 and below there at 811 1/2. The market’s close above the 9-day moving average suggests the short-term trend remains positive. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 833 1/2. The 9-day RSI over 70 indicates the market is approaching overbought levels.

MEAL (MAR): The daily stochastics gave a bullish indicator with a crossover up. The near-term upside objective is at 249.6. The gap up on the day session chart gave a bullish indicator and more follow through could be seen this session. First resistance comes in at 248.1, with support at 245.1. The market’s short-term trend is positive on a close above the 9-day moving average. The market’s close above the 2nd swing resistance number is a bullish indication.

BEAN OIL (MAR): The market’s close above the 9-day moving average suggests the short-term trend remains positive. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 30.68. 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. A new contract high was made on the rally. The gap upmove on the day session chart is a bullish indicator for trend. Daily swing resistance is found at 30.34 and above there at 30.68. Support should be encountered at 29.46 and 28.92. The 9-day RSI over 70 indicates the market is approaching overbought levels.

WHEAT MARKET RECAP

1/12/04

The USDA reports were considered mixed but the March wheat closed 13 3/4 higher and July wheat up 16 cents due to the lower than expected planted acreage. July wheat made a new contract high. The USDA pegged December 1st stocks at 1.521 billion bushels as compared with the average trade estimate of 1.509 billion bushels (range 1.479-1.530) and 1.320 billion last year. Ending stocks were pegged at 559 million bushels as compared with the average trade estimate of 555 million bushels (range 478-583) and 583 million bushels a last month’s USDA forecast. The USDA pegged Winter wheat Seedings at 43.464 million acres as compared with the average trade estimate 45.83 million acres (range 45.5-46.175) and 44.945 million last year. The sharp drop in planted acreage and a solid rally in the other grains helped support. On Saturday, Egypt bought 175,000 tons of US wheat and 120,000 tons of Australia wheat, which added to the positive tone coming into the week.

Technical Outlook

WHEAT (MAR) 01/13/04: Short-term indicators suggest buying dips today. A positive setup occurred with the close over the 1st swing resistance. Look for near-term support at 393 1/2 and below there at 385 3/4, with resistance levels at 404 1/2 and 407 3/4. The market’s close above the 9-day moving average suggests the short-term trend remains positive. The cross over and close above the 40-day moving average indicates the longer-term trend has turned up. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 407 3/4.

LIVE CATTLE RECAP

1/12/04

The cattle market collapsed under the weight of a lack of new news regarding the end to the import bans from Japan or Mexico and from weaker than expected demand from the packer. Feeder cattle were down sharply with added pressure from higher corn prices and expectations for a more ample supply ahead as feeders led the market down. There is no question that US consumers have a strong appetite for beef with beef prices up sharply on Friday and Monday. Boxed-beef cut-out values for choice 600-750 pound was up $2.97 to $132.32 as compared with $137.09 last week at this time. Making up for the 10% of the beef market which used to move into the export channel kept the tone bearish and with funds holding a hefty net long, the market remains vulnerable to more long liquidation selling.

Technical Outlook

CATTLE (APR) 01/13/04: Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 76.50. The close below the 2nd swing support number puts the market on the defensive. Support should be encountered at 73.67 and below there at 73.10. Market resistance is at 75.37 and then again at 76.50. The market’s close above the 9-day moving average suggests the short-term trend remains positive.

LEAN HOGS RECAP

1/12/04

February hogs closed down 197 points on the session as futures collapsed due to weakness in the cattle, a weak tone in the cash hog market and activation of stops below Friday’s lows. Packer demand is down sharply in cattle and packer margins in hogs are weak as well so there was little support under the market. With hefty production last week from the slaughter over 2 million head at heavier weights, traders believe that pork values could come under pressure this week. In addition, traders believe that retailers will feature beef at the expense of pork. After the close, pork product values were pegged at $56.28, up 4 cents from Friday and compared with $56.98 last week at this time.

Technical Outlook

HOGS (APR) 01/13/04: The market is in a bearish position with the close below the 2nd swing support number. Resistance levels comes in at 56.75 and 58.20 today, while support is around 54.65 and then 54.00. The outside day down is a negative signal. The daily closing price reversal down puts the market on the defensive. The market’s short-term trend is negative as the close remains below the 9-day moving average. The major trend is down with the cross over back below the 40-day moving average. The daily stochastic’s gave a bearish indicator with a crossover down. Momentum studies are trending lower from high levels which should accelerate a move lower on a break below the 1st swing support. The next downside objective is now at 54.00.

COCOA MARKET RECAP

1/12/04

Minor weakness was discounted but the market failed to close higher on the session. The recent bulge in prices seems to have run its course but with talk of disease in 4% of the Ivory Coast crop it is possible that small specs are drawn into the action on the long side. Currently the disease situation is supposedly only likely to impact 4% of the Ivory Coast crop and unless the issue is given more play we would not expect it to dominate the markets focus.

Technical Outlook

COCOA (MAR)01/13/04 The market tilt is slightly negative with the close under the pivot. Cocoa should run into resistance at 1684 and above there at 1694 with support at 1647 and 1620. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 1694.25.

COFFEE MARKET RECAP

1/12/04

March coffee gapped and closed higher taking a cue from the London market’s strong lead. The close back over 70 and above the Jan 6th high of 70.50 keeps the uptrend solid. The market likely garnered support from reports that Brazil’s green coffee exports were expected to be down 1.01 million bags in 2004, according to Brazil’s Council of Green Coffee Exporters. With the COT report showing the funds turning net long from a net short position on Dec 30th also encouraged further buying by this sector. While the market found resistance at 72, the setup is bullish and a move to test the Sept highs at 75 can not be ruled out.

Technical Outlook

COFFEE (MAR)1/13/04 The gap upmove on the day session chart is a bullish indicator for trend. The market setup is supportive for early gains with the close over the 1st swing resistance. The 9-day RSI over 70 indicates the market is approaching overbought levels. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The near-term upside objective is at 72.80.The Coffee contract should run into resistance at 71.75 and above there at 72.80 with support at 69.9 and 69.10. The market’s short-term trend is positive on a close above the 9-day moving average.

SUGAR MARKET RECAP

1/12/04

After an early price dip, spec buying supported prices, but there was not enough buying to push March sugar through resistance at 6 cents. The funds have increased their net short position, but if the market can close the gap between 607 and 610, it could start to force some funds to short cover. Russia’s sugar beet harvest was up nearly 23% in 2003 and the over supply of sugar has been a key factor keeping a weight on prices. However, the International Sugar Organization is expecting lower production from China which may mean that they could be importing a lot more sugar this year. China has been a major importer of other commodities recently, but so far not in sugar. Rising transportation costs are a concern.

Technical Outlook

SUGAR (MAR) 01/13/04: It is a mildly bullish indicator that the market closed over the pivot swing number. Swing resistance comes in at 6.14, with support found at 5.72. The market’s short-term trend is positive on a close above the 9-day moving average. 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 near-term upside objective is at 6.14.

COTTON MARKET RECAP

1/12/04

March cotton recovered from early losses off the USDA report to close slightly higher. While the price dip may not have fully corrected the market’s over bought condition, rejection of lower prices suggest the up trend remains in tack. Key resistance remains at 76. The market was somewhat disappointed that the USDA did not lower China’s production and lowered Pakistan’s production by less than expected. The minor changes to the world numbers slightly raised world ending stocks to 32.36 million bales, up from 32.19 million bales in the December report. However, export business for US cotton remains strong, and the overall supply/demand fundamentals are bullish.

Technical Outlook

COTTON (MAR) 01/13/04: The market’s close below the 9-day moving average is an indication the short-term trend remains negative. It is a slightly negative indicator that the close was lower than the pivot swing number. Next resistance area comes in at 75.06 and then again at 75.68, while support is targeted at 73.46 and 72.48. 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 72.48. The daily closing price reversal up is positive. ORANGE JUICE (MAR)1/13/04 The daily closing price reversal up is positive. The market setup is supportive for early gains with the close over the 1st swing resistance. Orange Juice should run into resistance at 65.30 and above there at 65.55 with support at 64.20 and 63.35. The market’s short-term trend is negative as the close remains below the 9-day moving average. Momentum studies are declining, but have fallen to oversold levels. The next downside objective is now at 63.35.