Will Higher Beef Prices Discourage Consumer Demand?

Technical Outlook

BONDS (DEC) 11/13/03: A positive setup occurred with the close over the 1st swing resistance. Near-term resistance for bonds is at 108.14 and then again at 108.23, while swing support hits at 107.15 and below there at 106.25. The market’s close above the 9-day moving average suggests the short-term trend remains positive. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 106.25.

T-NOTES(DEC) 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 110.29. It is a mildly bullish indicator that the market closed over the pivot swing number. Near-term resistance for the T-Notes is at 111.29 and then again at 112.03, while swing support hits at 111.10 and below there at 110.29. The market’s short-term trend is negative as the close remains below the 9-day moving average.

STOCK INDICES RECAP

11/12/2003

We are pretty surprised by the action in the stock market but it would appear that the market picked up some strength off the idea that the US was planning to move aggressively forward with installing a government in Iraq. In other words, is it possible that the US is planning an end game in Iraq. We think getting out of Iraq will be extremely difficult and time consuming but apparently the stock market sensed some kind of positive spin from the events Wednesday. Apparently the market took the President seriously when he suggested that the US was embarking on a new course in Iraq.

Technical Outlook

S&P500 (DEC) 11/13/03: The market’s close above the 2nd swing resistance number is a bullish indication. Underlying support comes in at 1050.40 and 1041.50, with overhead resistance at 1063.60 and 1067.90. 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 1067.90.

S&P E-Mini (DEC): The market made a new contract high on the rally. Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The next downside objective is 1039.88. The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Near-term resistance for the S&P Mini is at 1064.25 and then again at 1068.88, while swing support hits at 1049.75 and below there at 1039.88. A negative signal for trend short-term was given on a close under the 9-bar moving average.

NASDAQ (DEC) 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 1458.00 and above there at 1469.00 with support at 1425.00 and 1403.00. 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 1403.0.

CURRENCY MARKET RECAP

11/12/2003

A massive downward track in the Dollar looks to extend aggressively, as the Dollar violated several layers of support on the charts and US officials were out trying to talk the Yuan up. In other words, the US Administration is attempting to send the Dollar down and the market is willing to accommodate. The market was a little surprised by the magnitude of the rally in the euro, which seemed to come without much in the way of favorable economic information from the Euro zone. We continue to think that the Canadian Dollar will remain the strongest bull market in the currencies.

Technical Outlook

YEN (DEC): The market’s close above the 9-day moving average suggests the short-term trend remains positive. It is a slightly negative indicator that the close was lower than the pivot swing number. Swing resistance is targeted at 92.31 and above there at 92.62, with the yen finding support around 91.68 and below there at 91.36. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 92.62.

EURO (DEC): 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 1.1690. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.1544, with overhead resistance at 1.1690. 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

11/12/2003

The gold market exploded in the face of a falling US Dollar and it would appear that the trend in the Dollar will continue to favor the bull camp in gold and silver. Both silver and gold markets noted extensive fund buying during the action, which in effect puffs up an already massive fund and small spec long position. It should be noted that the US Treasury Secretary once again called for China to follow WTO rules and called for China to Free-up” the exchange rate. In other words, it would not be surprising for the Dollar to fall significantly and in turn throw gold and silver into a significant upward thrust.

Technical Outlook

SILVER (DEC): 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. Initial support for silver is at 520.3 and below there at 500.9 with resistance likely at 530.0 and 546.8. The market’s close above the 9-day moving average suggests the short-term trend remains positive. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 530.0. The 9-day RSI over 70 indicates the market is approaching overbought levels.

GOLD (DEC): Support for gold today comes in near 385.75, while resistance is pegged at 402.15. 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 402.15. The market’s close above the 2nd swing resistance number is a bullish indication. 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.

COPPER MARKET RECAP

11/12/2003

Copper prices managed to shake off early weakness and close higher but we don’t get the sense that the market is as solid as it has been. Certainly strength in the US stock market helped copper but the strength in the stock market was not the result of improving macro economic sentiment and therefore copper is still somewhat hamstrung by the economy. However, if the Chinese continue buy in the overnight action copper can probably ignore the ebb and flow of the macro condition.

ENERGY MARKET RECAP

11/12/2003

The energy complex seemed to fade into a minor profit-taking slide Wednesday possibly because some in the trade fear the weekly inventory reports. Apparently the recent revelations of the potential for terrorism against tankers didn’t provide much support to energy prices in the action Wednesday. The expectation for the weekly inventory report did call for some minor builds in crude and that could justify a temporary correction in prices but in the end traders expect supplies to remain tight. The natural gas market saw aggressive liquidation during the session because of the weekly inventory report due out Thursday morning and with such a large small spec long in position we think the break Wednesday was fueled by stop loss selling.

Technical Outlook

CRUDE OIL (JAN): The daily closing price reversal down puts the market on the defensive. It is a mildly bullish indicator that the market closed over the pivot swing number. Support for crude is keyed on 30.60 and below there at 30.23, with resistance pegged at 31.19 and 31.41. The upside crossover (9 above 18) of the moving averages suggests a developing short-term uptrend. Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 31.41.

UNLEADED GAS (JAN): Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 86.54. A positive setup occurred with the close over the 1st swing resistance. Resistance today is at 86.54, while support should be found around 82.34. The moving average crossover up (9 above 18) indicates a possible developing short-term uptrend. Short-term indicators suggest buying dips today.

HEATING OIL (JAN): It is a mildly bullish indicator that the market closed over the pivot swing number. Heating oil should encounter support around 83.61, with resistance is at 86.71. The upside crossover (9 above 18) of the moving averages suggests a developing short-term uptrend. Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 86.71.

CORN MARKET RECAP

11/12/2003

March corn closed 7 1/2 higher on the session in active trade with commercials, speculators and funds all active buyers. The USDA report was bullish with the market gapping up 2 1/2 cents on the opening. The USDA pegged crop production at 10.278 billion bushels as compared with the average trade estimate of 10.345 billion bushels (range 10.483-10.257). This compares with 10.207 billion bushels last month. Ending stocks were pegged at 1.349 billion bushels as compared with trade estimates at 1.345 billion bushels. World ending stocks were revised lower to 76.45 million tonnes from 77.16 million last month and 100.31 million tons last year.

Technical Outlook

CORN (MAR) 11/13/03: 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 238 3/4. The market’s close above the 2nd swing resistance number is a bullish indication. Market resistance comes in at 252 1/4 today, with support at 238 3/4. The market’s short-term trend is positive on a close above the 9-day moving average. The gap up on the day session chart gave a bullish indicator and more follow through could be seen this session.

SOY COMPLEX RECAP

11/12/2003

January soybeans closed 5 3/4 cent lower on the session and near the opening but 22 cents down from the highs of the day. The USDA report was considered neutral but strength in the other grains brought the market higher into the mid-session. Profit-taking selling late ran the market into sell-stops which drove futures down into the close. US soybeans production was pegged at 2.451 billion bushels as compared with the average trade estimate of 2.452 billion bushels (range 2.476-2.430). Ending stocks were pegged at 125 million bushels as compared with trade expectations at 117 million bushels and last months forecast of 130 million. Last months ending stocks at 130 million bushels were already pegged at the lowest ending stock forecast since the 1976/1977 season. The stocks/usage ratio that season was 7.2% as compared with the current estimate of 5.0% which is a modern-day, all-time low.

Technical Outlook

SOYBEANS (JAN) 11/13/03: The downside closing price reversal on the daily chart is somewhat negative. It is a slightly negative indicator that the close was lower than the pivot swing number. The next area of resistance is around 782 and 799 , while 1st support hits today at 758 and below there at 751 . 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 751 .

MEAL (MAR): 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 234.0. First resistance comes in at 243.5, with support at 236.0. The market’s short-term trend is negative as the close remains below the 9-day moving average. It is a mildly bullish indicator that the market closed over the pivot swing number.

BEAN OIL (MAR): The market’s close above the 9-day moving average suggests the short-term trend remains positive. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 26.29. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Daily swing resistance is found at 25.89 and above there at 26.29. Support should be encountered at 25.28 and 25.07.

WHEAT MARKET RECAP

11/12/2003

March wheat closed 15 1/2 cents higher on the session and to a new contract high with nearby futures at a 1-year high. Funds were active buyers on indications that China will buy near 1 million tonnes of US wheat soon, a bullish USDA ending stocks forecast for US wheat and tighter world ending stocks. In addition, the French soft wheat ending stocks forecast was revised lower to 1.51 million tonnes from 4.0 million last year as officials have seen a noticeable increase in feed usage. The USDA Supply/Demand report was neutral. The USDA raised exports by 25 million bushels which pushed ending stocks down to 608 million bushels as compared with the average trade estimate of 609 million bushels. Last months estimate was 633 million bushels. World Wheat ending stocks, however, were pegged at 126.31 million tonnes, down from 130.17 million last month, 163.72 million last year and 198 million two years ago.

Technical Outlook

WHEAT (MAR) 11/13/03: A new contract high was made on the rally. 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. Look for near-term support at 406 and below there at 394 , with resistance levels at 423 and 428 . 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 428 . The 9-day RSI over 70 indicates the market is approaching overbought levels.

LIVE CATTLE RECAP

11/12/2003

December cattle closed limit-down for the second session in a row. Heavy fund selling hit the market in spite of the higher opening and the stiff discount to the cash market as traders are fearful that the recent higher beef prices will be enough to discourage consumer demand. In addition, packer profit margins are deep in the red. Boxed-beef cut-out values were down 94 cents to $171.44. Cash bids in the southern plains were at $102, down $2.00 from yesterday and down $3.00 from the bulk of trade last week. Slaughter for the week is at 337,000 head as compared with 334,000 last week and 376,000 head last year.

Technical Outlook

CATTLE (DEC) 11/13/03: The daily stochastics have crossed over down which is a bearish indication. 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 93.77. The swing indicator gave a moderately negative reading with the close below the 1st support number. Support should be encountered at 94.30 and below there at 93.77. Market resistance is at 96.37 and then again at 97.92. The market’s close above the 9-day moving average suggests the short-term trend remains positive.

LEAN HOGS RECAP

11/12/2003

December hogs closed 67 lower on the session and at the lowest level since August 1st as another limit-down trade in cattle and weakness in the cash market helped pressure. Hog slaughter for the week is at 1.137 million head as compared with 1.174 million last week and 1.131 million head last year. The CME 2-day lean Index through November 8th was up 33 cents to 50.36 which is the 6th consecutive day of higher values. Weekly average weights for Iowa/Minnesota for the week ending November 8th came in at 265.9 pounds, up .4 pounds from last week and up 2 pounds from last year. This added to the bearish tone as slaughter and weights remain higher than expected.

Technical Outlook

HOGS (DEC) 11/13/03: The market’s close below the pivot swing number is a mildly negative setup. Resistance levels comes in at 50.67 and 51.55 today, while support is around 49.47 and then 49.15. 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 49.15. With a reading under 30, the 9-day RSI is approaching oversold levels.

COCOA MARKET RECAP

11/12/2003

Cocoa prices exploded as the rebels suggested that the blocked an attempted assassination of their leader. The rebels claim that the attempt was the work of nationals from the Ivory Coast government and that serves to stir up political anxiety and cause concern among physical buyers. We also think that the chart breakout prompted some funds to cover shorts and that action came on top of thin conditions in the pit. Introducing political uncertainty before the crop moves out of the bush is a very bullish development if the recent claims escalate into a full-blown melt down.

Technical Outlook

COCOA (MAR)11/13/03 The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Cocoa should run into resistance at 1562 and above there at 1588 with support at 1473 and 1410. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 1587.75.

COFFEE MARKET RECAP

11/12/2003

March coffee closed weaker as fund and origin sales continue to cap any upward price attempt. Although the funds already hold a large net short position, the selling shows no signs of abating. The selling may begin to dry up once the December contract goes off the board. The trade does not seem to be focused on Brazil where the crop is in need of rain. Scattered showers were expected in Brazil Thursday & over the weekend. Coffee farmers had to decide today on whether to exercise put options and a large amount of coffee is expected to be delivered to government warehouses since world coffee prices are so low. If a large number of put options are exercise it should be supportive to prices since it will keep supplies off the market.

Technical Outlook

COFFEE (MAR)11/13/03 The downside closing price reversal on the daily chart is somewhat negative. The market tilt is slightly negative with the close under the pivot. Momentum studies are declining, but have fallen to oversold levels. The next downside objective is now at 61.40.The Coffee contract should run into resistance at 62.70 and above there at 63.40 with support at 61.7 and 61.40. The market’s short-term trend is negative as the close remains below the 9-day moving average.

SUGAR MARKET RECAP

11/12/2003

The market inched higher in quiet trade for the second day in a row as light speculative buying is being offset by a lack of fundamental news to entice new commercial buyers. As a result, overhead trade selling has emerged on each rally attempt. With funds holding a massive net short position of near 35,000 contracts, it will not take much in the way of increased buying from even routine buyers in the cash market to see a significant bounce. However, Russia is expected to be sidelined to until early next year as their own crop was better than expected and internal prices are still low. In addition, Middle East buyers have been very quiet recently and there is no sign of new buying with the exception of Egypt tender for 40,000 tonnes of raw sugar on Monday.

Technical Outlook

SUGAR (MAR) 11/13/03: It is a mildly bullish indicator that the market closed over the pivot swing number. Swing resistance comes in at 6.33, with support found at 6.09. 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 6.33.

COTTON MARKET RECAP

11/12/2003

An early bullish reaction to the USDA report faded as heavy profit taking and liquidation out of the December cotton pressured March cotton sharply lower. The USDA report was generally bullish with China’s production reduced to 22 million bales, down from 25.5 million in last month’s report. Also the US exports were raised to a record 13.2 million bales. Support for March cotton comes in at 75.80. Export sales estimates range between 300,000 to 600,000 bales. vs 275,800 bales the previous week.

Technical Outlook

COTTON (MAR) 11/13/03: 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 79.13 and then again at 81.74, while support is targeted at 74.98 and 73.44. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 73.44. 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.