Why Demand For Copper Should Stay Strong

The market lacked much in the way of active
follow-through buying from the reversal yesterday but there was also not much
new selling with talk of the oversold condition and the reversal after 12
straight sessions of contract lows from yesterday. As of Sunday, the crop was
16% harvested from 9% the previous week which is behind the 5-year average at
19%. The warm weather of the past few weeks has allowed the crop in the north to
come closer to maturity and there seems to be less of a concern for frost this
weekend. Weekend forecast for possible frost in northern Minnesota and North
Dakota failed to generate much buying interest. Export news remains slow. Some
rains in producing areas of Brazil should help in preparation for planting. For
Thursday mornings USDA quarterly Stocks report, traders are looking for
September 1st stocks near 951 million bushels (range 903-1.03) as compared with
1.087 billion bushels last year. Support for December corn comes in at 206 and
204 1/2 with 212 3/4 and 215 as resistance.

Technical Outlook

CORN (DEC) 09/29/2004: Daily momentum studies are
on the rise from low levels and should accelerate a move higher on a push
through the 1st swing resistance. A negative signal for trend short-term was
given on a close under the 9-bar moving average. With the close higher than the
pivot swing number, the market is in a slightly bullish posture. The near-term
upside objective is at 211 1/2. With a reading under 30, the 9-day RSI is
approaching oversold levels. The next area of resistance is around 210 and 211
1/2, while 1st support hits today at 207 and below there at 205 1/4.

 

SOY COMPLEX RECAP

9/28/2004

November Soybeans finished up 1/2 at 531 1/2, 2
1/2 off the high and 3 up from the low. January Soybeans closed up 1/4 at 539
1/2. This was 3 up from the low and 2 off the high.

December Soymeal closed up 0.4 at 161.6. This was
0.8 up from the low and 0.4 off the high.

December Soybean Oil finished down 0.16 at 20.83,
0.25 off the high and 0.07 up from the low.

The market closed near unchanged in a choppy and
quiet trading range. The early rally stalled at yesterday’s highs as there was a
lack of new buying interest after a bounce. The market found early support from
follow-through technical buying from the reversal on Monday and from talk of
possible frost damage for the weekend cold front. With active harvest, basis
levels were weaker in the country and cash dealers indicate a pick-up in
movement with producer loan deficiency payments said to be 18-23 cents at
Midwest locations. Oil experienced some selling pressures from weaker palm
prices overnight and meal basis levels continue to weaken due to the active
harvest and increased availability of meal and competing feed grains. Harvest is
now 18% complete (as of Sunday) from 8% last week and trade expectations near
20%. Weather looks ideal for harvest in the next week with the exception of a
rain event moving across the central Midwest on Friday. For Thursday mornings
USDA quarterly Stocks report, traders are looking for September 1st stocks near
117 million bushels (range 91-145) as compared with 178 million bushels last
year. Resistance for November soybeans comes in near 542 and 548 1/4 with
support at 524 1/2 and 522 1/2.

Technical Outlook

BEANS (NOV) 09/29/2004: Daily stochastics are
showing positive momentum from oversold levels, which should reinforce a move
higher if near-term resistance is taken out. The market’s short-term trend is
negative as the close remains below the 9-day moving average. The close over the
pivot swing is a somewhat positive setup. The near-term upside target is at 536
3/4. The market is approaching oversold levels on an RSI reading under 30. The
next area of resistance is around 534 1/4 and 536 3/4, while 1st support hits
today at 528 3/4 and below there at 526.

MEAL (DEC) 09/29/2004: The stochastic indicator
is rising from oversold levels, which is bullish and should support higher
prices. The market’s close below the 9-day moving average is an indication the
short-term trend remains negative. The market has a slightly positive tilt with
the close over the swing pivot. The near-term upside target is at 162.7. The
next area of resistance is around 162.2 and 162.7, while 1st support hits today
at 161.0 and below there at 160.3.

BEANOIL (DEC) 09/29/2004: Momentum studies are
declining, but have fallen to oversold levels. The close below the 9-day moving
average is a negative short-term indicator for trend. 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 20.56. The 9-day RSI under 30 indicates the market is approaching oversold
levels. The next area of resistance is around 20.99 and 21.19, while 1st support
hits today at 20.67 and below there at 20.56.

 

WHEAT MARKET RECAP

9/28/2004

December Wheat finished down 4 3/4 at 315 3/4, 7 3/4 off the
high and 1/4 up from the low. March Wheat closed down 5 at 327 3/4. This was 1/2
up from the low and 7 1/4 off the high.

The lower opening failed to generate new selling
interest and the market managed a bounce. However, the lower close The USDA
annual small grains report will be released Thursday which will include an
update on the size of the US 2004 wheat crop. Traders believe the crop will come
in near 2.108 billion bushels (range 2.074-2.135) as compared with the August
12th USDA forecast of 2.123 billion bushels and last years crop at 2.337 billion
bushels. For Thursday mornings USDA quarterly Stocks report, traders are looking
for September 1st stocks near 1.873 billion bushels (range 1.80-1.934) as
compared with 2.039 billion bushels last year. Winter wheat planting progress is
thought to be in high gear again this week after last weeks hefty rain event set
the soil for improved germination. The spring wheat crop is now 88% harvested
(as of Sunday) which was up 7% from last week and compares with 90% as the
14-year average for this time of the year. In addition, the winter wheat crop is
now 42% planted as compared with 29% last week and 37% as the 14-year average.
For China, winter wheat plantings are thought to be near 22.7 million hectares,
up 2.9% from last year. Support for December wheat comes in at 315 and 309 with
329 1/2 and 322 1/2 as resistance.

Technical Outlook

WHEAT (DEC) 09/29/2004: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. A
negative signal for trend short-term was given on a close under the 9-bar moving
average. The close below the 1st swing support could weigh on the market. The
next downside objective is now at 309 3/4. The next area of resistance is around
319 3/4 and 325 1/2, while 1st support hits today at 311 3/4 and below there at
309 3/4.

 

LIVE CATTLE RECAP

9/28/2004

December Live Cattle closed up 0.22 at 86.65.
This was 0.40 up from the low and 0.52 off the high.

November Feeder Cattle finished up 0.37 at
109.47, 0.47 off the high and 0.62 up from the low.

The cattle market inched higher on the session
after the early break to the lowest level since September 9th failed to generate
more selling interest. There is still no trade in the cash market this week with
cash cattle in the plains offered at $85.00-$87.00 but a lack of new bids from
packers after last weeks trades at $84.00-$84.50. The strength in the beef
market and ideas that the market was oversold after not closing higher for 7
sessions in a row helped to support. Slaughter came in at 125,000 head as
compared with trade expectations at 118,000 to 126,000 head. Boxed-beef cutout
values (600-750 choice) were up $.44 on the day at mid-session to $139.09 as
compared with $136.96 last week at this time.

Technical Outlook

CATTLE (DEC) 09/29/2004: Momentum studies
trending lower at mid-range should accelerate a move lower if support levels are
taken out. The market’s close below the 9-day moving average is an indication
the short-term trend remains negative. The daily closing price reversal up on
the daily chart is somewhat positive. The market has a slightly positive tilt
with the close over the swing pivot. The next downside objective is 85.770. The
next area of resistance is around 87.100 and 87.600, while 1st support hits
today at 86.200 and below there at 85.770.

 

LEAN HOGS RECAP

9/28/2004

December Lean Hogs closed down 1.00 at 67.82.
This was 0.67 up from the low and 1.32 off the high.

February Pork Bellies finished down 2.55 at
94.95, 2.55 off the high and 0.22 up from the low.

December hogs closed sharply lower for the third
session in a row as the market corrects from the extreme overbought condition
going into the USDA report last week. The weaker cash market triggered a sharp
break in October futures and other months followed the market lower with
speculative long liquidation selling noted and fund sellers also active.
Continued talk of the expanding hog herd helped to pressure the market. The CME
2-Day Lean index for the period ending September 24th came in at 80.16 which was
up $.99 from the previous session and up from 73.02 on September 15th. This
leaves December hogs at a significant discount to the cash market.

Technical Outlook

HOGS (DEC) 09/29/2004: 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 market’s short-term
trend is negative as the close remains below the 9-day moving average. The
market setup is somewhat negative with the close under the 1st swing support.
The next downside objective is 66.020. Daily studies pointing down suggests
selling minor rallies. The next area of resistance is around 68.820 and 69.970,
while 1st support hits today at 66.850 and below there at 66.020.

 

COCOA MARKET RECAP

9/28/2004

December Cocoa finished down 10 at 1445, 25 off
the high and 2 up from the low.

With cocoa prices sliding temporarily below
critical support we have to wonder if origin sellers are going to be forced into
forward sales. With harvest pressure slowly building it is not premature to fear
forward selling from the producers and with the last COT report showing an
ongoing net spec and fund long there is the potential to see selling interest
from a number of sources. Offsetting some of the weakness on Tuesday were
reports that industry buyers were scaling into purchases on weakness.

Technical Outlook

COCOA (DEC) 09/29/2004: The daily stochastics
gave a bearish indicator with a crossover down. Momentum studies are still
bearish but are now at oversold levels and will tend to support reversal action
if it occurs. The close below the 9-day moving average is a negative short-term
indicator for trend. A negative signal was given by the outside day down. The
swing indicator gave a moderately negative reading with the close below the 1st
support number. The next downside objective is now at 1424. The next area of
resistance is around 1458 and 1477, while 1st support hits today at 1432 and
below there at 1424.

 

COFFEE MARKET RECAP

9/28/2004

December Coffee closed down 4.90 at 81.10. This
was 0.25 up from the low and 3.40 off the high.

The coffee market fell aggressively and would
seem to be in the process of washing out the remaining small spec longs in off
the August and September weather bounce. We are not sure if the Starbucks price
increase impacts consumer demand for coffee but a $0.11 per cup increase is
something that could at least foster talk of competing drinks. With London
traders noting fund selling and US coffee noting small spec selling it is pretty
clear that the prevailing pattern is pointing downward.

Technical Outlook

COFFEE (DEC) 09/29/2004: A crossover down in the
daily stochastics is a bearish signal. Stochastics turning bearish at overbought
levels will tend to support lower prices if support levels are broken. A
negative signal for trend short-term was given on a close under the 9-bar moving
average. The close below the 2nd swing support number puts the market on the
defensive. The next downside target is 78.25. The next area of resistance is
around 82.90 and 85.50, while 1st support hits today at 79.30 and below there at
78.25.

 

SUGAR MARKET RECAP

9/28/2004

October Sugar closed up 0.03 at 8.28. This was
0.06 up from the low and 0.10 off the high.

March closed lower on overbought market ideas
while October futures inched higher with continued commercial interest ahead of
expiration. Ideas that end users are caught short-bought into a world production
deficit season helped to provide underlying support while the market noted some
interest from the trade on the short-side with October futures up over 100
points in just 6 trading sessions. Open interest for October futures fell 5002
contracts on Monday to 22,461. London futures closed lower after a higher
opening which helped pull the New York market down into the close.

Technical Outlook

SUGAR (MAR) 09/29/2004: Rising stochastics at
overbought levels warrant some caution for bulls. The close above the 9-day
moving average is a positive short-term indicator for trend. The market’s close
below the pivot swing number is a mildly negative setup. The next upside target
is 9.11. The next area of resistance is around 9.00 and 9.11, while 1st support
hits today at 8.85 and below there at 8.79.

 

COTTON MARKET RECAP

9/28/2004

October Cotton finished down 2.35 at 47.95, 2.64
off the high and equal to the low.

The market closed slightly lower in quiet trade
with a tight range of just 100 points. Rains in the southeast which were heavy
in some areas helped provide underlying support but a lack of supply-side buyers
helped to keep trade quiet. The market seems content to harvest the bumper US
crop and assumes a certain amount of damage from the hurricanes. However, with
the huge crop, and a massive ending stocks estimate from the last USDA
Supply/Demand report, the market is assuming that losses from hurricane damage
will not be significant. Traders await signs that the market is cheap enough to
trigger more aggressive exports ahead. If the export news remains slow, traders
are likely to assume that lower prices are necessary to attract new buyers.

Technical Outlook

COTTON (DEC) 09/29/2004: Daily stochastics are
trending lower but have declined into oversold territory. The close below the
9-day moving average is a negative short-term indicator for trend. It is a
slightly negative indicator that the close was lower than the pivot swing
number. The next downside target is 46.96. The next area of resistance is around
48.51 and 48.95, while 1st support hits today at 47.51 and below there at 46.96.