Soybean Market Commentary
by Terry Roggensack
www.TheHightowerReport.com

NEAR-TERM MARKET FUNDAMENTALS: Weather is front and center in the soybean complex this morning according to traders. Prices were marginally higher in the complex overnight with some traders crediting this to a forecast of colder weather during the later stages of the 6-10 day period. This is not expected to be a hard freeze at this point, but even a scattered frost is considered problematic by some analysts due to the extreme lateness of this year’s soybean crop. In the meantime, most forecasts call for normal to above normal conditions through the next 6-7 days, and this is considered very favorable to crop development. The latest Crop Progress report showed 68% of the soybean crop rated good/excellent which was unchanged from last week last week and compares with 57% last year. The 10 year average for this time of year is 53%. Seventeen percent of the soybean crop is dropping leaves, up from 7% last week and a 5-year average of 36%. The USDA announced two new sales of soybeans yesterday. One was to China for 113,000 tonnes and the other was for 110,000 tonnes to South Korea. If there are no major cancellations on the next Export Sales Report this Thursday, total soybean sales to-date should push well past 50% of the USDA’s projection for 2009/10. This would come only halfway through the first month of the new crop year, far ahead of the sales pace ever seen at this point going back to at least 1994/05. The National Oilseed Processors Association (NOPA) released its monthly crush numbers for August yesterday before the open. Both the crush number and oil stocks were considered supportive. NOPA’s August crush was 112.6 million bushels, down from 120.9 million in July. This was also down from August 2008 which was at 121.7 million bushels. Oil stocks were pegged at 2.52 billion pounds, about 100 million pounds below trade expectations. This week’s export inspections were in line with trade expectations at 10.2 million bushels. Inspections need to average 24.8 million bushels each week to reach the USDA’s projection for the marketing year.

TODAY’S GUIDANCE: The soybean market has established a pattern of moving lower in stages and this may continue. The reason for the downtrend is mainly the good weather in the US and favorable crop prospects in South America. The reason for the pauses is good export demand with 2009/10 export sales in soybeans already at near 50% of the total currently being projected by the USDA for the entire marketing year. Good weather should continue to trump demand as long as it we can avoid an early freeze. First support in the November contract remains at 884 to 885. Next support is near 861 to 864 1/2. First resistance remains at 910 1/2 and then at 940 1/2.

TODAY’S MARKET IDEAS: Given the oversold condition and threat of frost late next week, look for short-term bounce. Modest short covering is possible in the soybean complex as the market tries to sort out whether or not there will be a frost after next week. Barring a major cold snap, continue to look for a break below the July lows.

Currency Commentary
by Dave Hightower
www.TheHightowerReport.com

DOLLAR: It is not surprising to see the Dollar carving out fresh lows on the charts again this morning, as a number of international equity markets forged even more gains in the overnight action. Apparently currency traders and global equity traders simply discounted weak UK retail sales readings for August overnight, perhaps because the general consensus is entrenched in a global recovery view. We suspect that US data this morning will simply contribute to the downward track in the Dollar, with even more equity market gains in the US adding to the downside momentum in the Greenback. While other markets didn’t seem to fret over the prospect of a rising US budget deficit, off forward movement on US Health Care Reform, we suspect that the currency markets are set to assume that a move to expand US health care coverage to tens of millions of uninsured US workers, will ultimately balloon the US deficit. In short, the Dollar looks to see pressure off the macro economic outlook and also because of the prospect of even larger US budget deficits ahead. In order to reverse the bias in the Dollar, probably requires a major slide in the US equity markets.

EURO: The Euro remains well bid despite news overnight of a significant widening of its trade balance. As suggested early in the week, the upward bias in the Euro is not coming from the ebb and flow of economic performance in the Euro zone, the bullish bias in the Euro is coming from the firming prospects of a global recovery. It does seem as if the slack UK retail sales readings tripped up the euro temporarily this morning, but favorable US numbers later this morning should probably rekindle the upside bias in the Euro. Near term up trend channel resistance in the December Euro is seen at 147.90 today.

YEN: The Yen has generally respected a pattern of higher lows on the charts this week and that trend support is seen at 109.68 today, with a rise to the 109.93 level possible on Friday. Generally up beat views toward the Chinese economy and generally up beat expectations for the US economy today should leave the Yen in an upward motion on the charts. In the face of more US equity market gains and even better US numbers it is possible that the December Yen could touch 111.30 before the close this week.

SWISS: The trend in the Swiss looks really impressive but some players have begun to fret again over the prospect of intervention from the SNB, as they feel that a Swiss above 97.00 could hurt Swiss export activity. However, it is possible that the prospects of inflation are capable of offsetting the speculative selling interest in the Swiss off the threat of intervention. Critical up trend channel support in the December Swiss is seen at 96.68 today.

POUND: While the Pound has initially managed to discount the somewhat disappointing UK retail sales readings overnight, it seems that the Pound is still set to mostly draft off the persistent weakness in the US Dollar. Therefore, the Pound might be able to rise even further today, in the wake of the scheduled US data flows. Near term upside targeting in the December Pound today is 166.61.

CANADIAN DOLLAR: With another new high for the move overnight, the Canadian looks set to extend the upward push. In addition to feeding off a persistently weak US Dollar, the Canadian is also drafting off an upward bias in key Canadian commodities. In order to get to a technical resistance point in the Canadian requires a look at the weekly charts, with the market seemingly poised to forge a rise back above the 95.00 level.

TODAY’S MARKET IDEAS: More Dollar declines ahead, with the Canadian becoming the primary leadership currency.

Stock Market Commentary
by Dave Hightower
www.TheHightowerReport.com

With generally favorable Asian equity market action overnight and mostly positive action seen in the early UK equity markets, the bullish bias would seem to be poised to extend into the US Thursday action. For a while yesterday we thought that signs of forward movement on US Health Care reform would be seen as a budget busting negative to US stocks and bonds, but instead the market seemed to be lifted by the prospect that the latest compromise might lead to a positive solution. It is also possible that the market was simply looking at the prospect of lingering low interest rates, or perhaps it was simply looking at the better than expected US number flow. It is also possible that the latest compromise bill lacked a government run option and that was a relief to investors. However, the prospect of significant change in the latest “bill” is very high, as this issue has become a major polarizing issue in America. With the equity markets being presented with initial claims and housing figures this morning, it is possible that the macro economic news will be partially offsetting this morning, as the claims are expected to illicit slowing concerns, while the Housing readings are expected to foster more hopes of recovery. One has to continue to favor the bull track, given the recent date flow and the capacity to discount events in Washington.

S&P 500: Like other market measures, the S&P has managed another new high for the move in the early going today and that would seem to suggest that the bull camp retains its edge. However, the market is somewhat overbought and the bull camp will probably need a better than expected Housing starts and permits report in order to extend the rally straight away. Near term up trend channel support in the December S&P is seen at 1060 today, with many tech traders now projecting the next resistance zone in the S&P to be up at 1075.

DOW: With a pattern of higher highs this week and various sectors managing to step up to lead the markets upward, we have to think that the upward bias will remain in place. Certainly the markets have become partially overdone from a short term technical perspective, but the markets overall were not classically overbought in the last COT positioning reports and therefore corrections within each trading session seem to be capable of balancing periodic overbought conditions. Critical up trend channel support in the December Mini Dow today is 9,715, with near term upside targeting seen up at 9,775.

NASDAQ: While the Nasdaq has already seen another new high for the move this morning, the Nasdaq was presented with some partially discouraging news from the tech sector overnight and that could leave the Nasdaq as a laggard versus the rest of the market this morning. Apparently Oracle failed to meet market expectations on sales, but we suspect that news of other merger and acquisition projects will serve to keep sentiment toward the Nasdaq up beat. However, the failure to hold above 1712 this morning could signal a more modest correction before the market regains its bullish footing and in turn moves to an even higher trading range.

TODAY’S MARKET IDEAS: The bears need something definitively negative to alter the ongoing bullish bias in the marketplace.

About the Hightower Report
In 1990, Dave Hightower and Terry Roggensack recognized the need for a strong, independent research firm in the commodity and financial futures markets. They started The Hightower Report so that individual investors as well as commercial producers and end users would have access to research that focused specifically on commodities and financial futures yet independent of any brokerage firm or exchange. Dave & Terry's use of fundamental and technical analysis in conjunction with their deep market experience has enabled them to forge one of the premiere commodity research firms in the industry. The Hightower Report broadcasts comprehensive daily research reports to over 3000 locations in 45 countries worldwide.