Why Copper Exploded Today…

Short-covering has provided much of the support
this week but the lack of new buying interest after the higher opening trigger
some light speculative selling and the selling turned more active on the move
under Thursday’s lows. Commercial buying was noticeably absent and the market
quickly gave back a bulk of the gains for the week. Rain has slowed the harvest
in the northern cornbelt. South Korea bought 60,000 tons of corn from China and
while this news was anticipated for much of the week, the trade is concerned
that this may just be the start of a more aggressive corn selling spree from
China. December corn closed at 207 1/4 last month and 201 3/4 last week. Support
for December corn comes in at 203 1/4 and 201 3/4 with 206 1/2 and 208 as
resistance.

Technical Outlook

CORN (DEC) 11/01/2004: The daily stochastics have
crossed over down which is a bearish indication. Momentum studies trending lower
at mid-range should accelerate a move lower if support levels are taken out. The
market’s short-term trend is negative as the close remains below the 9-day
moving average. The outside day down is somewhat negative. The close below the
2nd swing support number puts the market on the defensive. The next downside
objective is now at 197 1/2. The next area of resistance is around 205 1/2 and
209 1/2, while 1st support hits today at 199 1/2 and below there at 197 1/2.

 

SOY COMPLEX RECAP

10/29/2004

January Soybeans finished down 2 at 533 1/2, 3
1/2 off the high and 5 1/2 up from the low. March Soybeans closed down 2 at 540
1/4. This was 5 up from the low and 3 1/4 off the high.

December Soymeal closed down 1.5 at 153.9. This
was 0.6 up from the low and 1.6 off the high.

December Soybean Oil finished up 0.01 at 21.5,
0.15 off the high and 0.24 up from the low.

The early bounce failed to attract new buying
interest and the market pushed lower led by professional and local trade
selling. The selling intensified into the mid-session as fears of lower demand
from China and a lack of commercial buying helped drive the market below
Thursday’s lows. News of weaker basis at the gulf added to the negative demand
tone. With a massive harvest nearly complete, traders expect to see strong signs
of export business on a daily basis or there is a perception that prices are not
cheap enough to attract demand. Traders expected near 1000 contracts for
deliveries but there were only 7 deliveries against the November futures on
first notice day. January soybeans closed at 534 3/4 last month and 532 last
week. While traders expected lower price action yesterday due to the move by
China officials to raise interest rates and slow their economy, the market
failed to react yesterday but a lack of new export news this morning seems to
have turned the psychology on the floor a bit more negative. Some producer
selling was noted out of Brazil at the end of the month. January soybean
resistance comes in at 535 and 537 3/4 with support at 526 1/2 and 522 1/2.

Technical Outlook

BEANS (JAN) 11/01/2004: Positive momentum studies
in the neutral zone will tend to reinforce higher price action. A negative
signal for trend short-term was given on a close under the 9-bar moving average.
The market’s close below the pivot swing number is a mildly negative setup. The
near-term upside target is at 542. The next area of resistance is around 538 and
542, while 1st support hits today at 529 and below there at 524.

MEAL (DEC) 11/01/2004: Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
The market’s short-term trend is negative as the close remains below the 9-day
moving average. The market’s close below the 1st swing support number suggests a
moderately negative setup for today. The next downside objective is 152.0. The
next area of resistance is around 155.0 and 156.3, while 1st support hits today
at 152.8 and below there at 152.0.

BEANOIL (DEC) 11/01/2004: Rising stochastics at
overbought levels warrant some caution for bulls. The market’s close above the
9-day moving average suggests the short-term trend remains positive. It is a
mildly bullish indicator that the market closed over the pivot swing number. The
next upside target is 21.86. The next area of resistance is around 21.69 and
21.86, while 1st support hits today at 21.31 and below there at 21.09.

 

WHEAT MARKET RECAP

10/29/2004

December Wheat finished down 5 3/4 at 316 1/2, 9 1/2 off the
high and 2 1/2 up from the low. March Wheat closed down 5 at 328 1/2. This was 3
1/4 up from the low and 7 1/2 off the high.

Funds and small specs emerged as sellers after
the higher opening for wheat and talk that China is going to switch the
remaining 180,000 tons of US soft red wheat on the books to US hard spring wheat
added to the negative tone. However, Minneapolis December wheat was down 4 cents
on the day into the mid-session but was gaining 2 cents on Chicago. Higher
quality soft red wheat has been difficult to find but the lost business, if
confirmed, is not much business but other fundamental news was lacking. The
sweeping reversal after hitting the highest level since September 24th helped to
trigger more active speculative selling, thought to be profit-taking. A lack of
new export or demand news combined with talk of recent good weather for next
years crops helped to trigger the active selling. December wheat closed at 306
3/4 last month and 308 1/2 last week. Fears of absorbing the massive world crop
and fears that China demand for wheat could dwindle with a slower economy helped
trigger the weakness. December wheat support comes in at 311 1/2 and 308 with
324 and 331 as resistance.

Technical Outlook

WHEAT (DEC) 11/01/2004: The major trend has
turned down with the cross over back below the 40-day moving average. Rising
stochastics at overbought levels warrant some caution for bulls. The market’s
close above the 9-day moving average suggests the short-term trend remains
positive. The outside day down and close below the previous day’s low is a
negative signal. The swing indicator gave a moderately negative reading with the
close below the 1st support number. The near-term upside target is at 330 1/4.
The next area of resistance is around 322 1/2 and 330 1/4, while 1st support
hits today at 310 1/2 and below there at 306 1/4.

 

LIVE CATTLE RECAP

10/29/2004

December Live Cattle closed down 1.77 at 84.47.
This was 1.17 up from the low and 2.02 off the high.

November Feeder Cattle finished down 2.25 at
109.20, 2.37 off the high and 0.30 up from the low.

The market collapsed on Friday under the weight
of continued fund long liquidation selling and talk that several funds are
building a net short position. Average slaughter weights are high, beef prices
are falling and traders are fearful that exports will not pick-up until well
into the new year. The break-out to the downside of the extended head and
shoulders top formation leaves 78.85 as the downside objective measured from the
neck-line (at 85.72). Boxed-beef prices were down $1.17 to $140.06 at
mid-session as compared with $142.37 last week at this time. December cattle
moved to the lowest level since mid-May.

Technical Outlook

CATTLE (DEC) 11/01/2004: Momentum studies are
declining, but have fallen to oversold levels. A negative signal for trend
short-term was given on a close under the 9-bar moving average. The market is in
a bearish position with the close below the 2nd swing support number. The next
downside objective is now at 81.500. The 9-day RSI under 30 indicates the market
is approaching oversold levels. The next area of resistance is around 86.070 and
87.870, while 1st support hits today at 82.900 and below there at 81.500.

 

LEAN HOGS RECAP

10/29/2004

December Lean Hogs closed up 1.10 at 67.45. This
was 1.35 up from the low and 0.15 off the high.

February Pork Bellies finished up 0.07 at 94.80,
2.00 off the high and 0.30 up from the low.

December hogs traded as much as 87 points higher
on the session early in the day but the active long liquidation sell-off in
cattle finally forced hogs lower on the session. The discount to cash and active
fund buying support the strong close. A general fear of too much total meat
production and talk of a slow down in the economy which might slow meat demand
added to the bearish tone. A steady to higher trade in the cash market helped
support the early gains with December at a discount to the cash. The CME 2-Day
Lean Index for the period ending October 27th was reported at 71.09, up 17 cents
from the previous session and up from 69.89 the previous week. Strength in the
bellies helped support.

Technical Outlook

HOGS (DEC) 11/01/2004: The market now above the
40-day moving average suggests the longer-term trend has turned up. Positive
momentum studies in the neutral zone will tend to reinforce higher price action.
The close above the 9-day moving average is a positive short-term indicator for
trend. There could be more upside follow through since the market closed above
the 2nd swing resistance. The next upside target is 68.650. The next area of
resistance is around 68.200 and 68.650, while 1st support hits today at 66.720
and below there at 65.670.

 

COCOA MARKET RECAP

10/29/2004

December Cocoa finished down 16 at 1469, 31 off
the high and 14 up from the low.

Cocoa prices softened after an early attempt to
rally and then settled lower on the session. It is a little surprising that
prices fell considering that the Ivory Coast farmers move the resumption of the
port strike forward to November 1st and that is a little strange considering
that the shippers will already be closed due to holiday. It is also surprising
that cocoa prices were weak so soon after all the recent political news and the
threats against the Ivory Coast main crop. However, reports of origin selling
from Ghana simply prompted week ending profit taking and with the political
potentials next week we have to think that the market will respect close in
support.

Technical Outlook

COCOA (DEC) 11/01/2004: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The market’s close above the 9-day moving average
suggests the short-term trend remains positive. The close below the 1st swing
support could weigh on the market. The next upside objective is 1518. The next
area of resistance is around 1491 and 1518, while 1st support hits today at 1447
and below there at 1429.

 

COFFEE MARKET RECAP

10/29/2004

December Coffee closed down 3.30 at 74.40. This
was 0.30 up from the low and 4.25 off the high.

December coffee rallied early in the session but
failed to penetrate the highs for the week and slipped back below the opening
into early in the day. The market closed 330 points lower on the session and 70
lower on the week. London futures collapsed late in their trading session and
failed to find support with the market pushing to new contract lows and nearby
futures to the lowest level since September of 2002. Fears of a massive Vietnam
crop and a lack of commercial buying support on the correction added to the
bearish tone. Cash differentials for Brazil and Colombia beans were firm on the
week and producer selling remains light but between India and Vietnam, traders
are fearful of aggressive selling of Robusta coffee in 2005.

Technical Outlook

COFFEE (DEC) 11/01/2004: The close below the
40-day moving average is an indication the longer-term trend has turned down.
The upside crossover (9 above 18) of the moving averages suggests a developing
short-term uptrend. Stochastics are at mid-range but trending higher, which
should reinforce a move higher if resistance levels are taken out. A negative
signal for trend short-term was given on a close under the 9-bar moving average.
The market is in a bearish position with the close below the 2nd swing support
number. The near-term upside objective is at 79.90. The next area of resistance
is around 76.65 and 79.90, while 1st support hits today at 72.15 and below there
at 70.85.

 

SUGAR MARKET RECAP

10/29/2004

March Sugar closed up 0.04 at 8.60. This was 0.05
up from the low and 0.09 off the high.

March sugar closed 4 higher on the session but
down 33 on the week. The market bounced to recoup part of Thursday’s losses but
failed to hold the gains and closed poorly. Trade was slow on the week as
traders are waiting to see if the 80 point break from the highs will attract
buying from any of the world’s key, and non-routine, buyers such as India or
Russia. Trade house buying provided support on the session.

Technical Outlook

SUGAR (MAR) 11/01/2004: Daily stochastics are
trending lower but have declined into oversold territory. 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 under the swing
pivot. The next downside target is 8.47. The next area of resistance is around
8.66 and 8.74, while 1st support hits today at 8.53 and below there at 8.47.

 

COTTON MARKET RECAP

10/29/2004

December Cotton finished down 0.33 at 44.98, 0.82
off the high and 0.33 up from the low.

After seeing slightly disappointing weekly cotton
export sales data and continued weakness in US grain prices we can understand
the bearish ongoing attitude toward cotton prices. While other commodity markets
re-adjusted their demand Chinese expectations, the US cotton market is so
swamped with cotton supply that a minor recovery in foreign demand expectations
is unimportant. About the only favorable issue for cotton is the relatively
oversold status of the marketplace.

Technical Outlook

COTTON (DEC) 11/01/2004: Momentum studies
trending lower at mid-range should accelerate a move lower if support levels are
taken out. A negative signal for trend short-term was given on a close under the
9-bar moving average. It is a slightly negative indicator that the close was
lower than the pivot swing number. The next downside objective is 43.96. The
next area of resistance is around 45.55 and 46.25, while 1st support hits today
at 44.41 and below there at 43.96.