Market Recap Report - 12/3/2004

***BOND MARKET RECAP - 12/3/2004

March Bonds closed down 0-10 at 109-21. This was 0-07 up from the low and 0-16 off the high.

March 10 Yr Treasury Notes finished down 0-040 at 111-070, 0-040 off the high and 0-070 up from the low.

The Treasury market fell to the lowest level since early September during the action Thursday as some traders were fearful of a strong non farm payroll report. Other longs supposedly exited the market because of another significant slide in oil prices as that is thought to facilitate economic growth. We also think that the chance of an international currency crisis was downgraded slightly after ECB official comments hinted at intervention against further Dollar losses. The market seems to be fairly convinced that the monthly payroll report Friday will actually serve to extend the interest rate projections beyond the upcoming FOMC. In other words, the market has now begun to think that the Fed's recent string of rate hikes is due to be extended over the coming two meetings and possibly even further.

Technical Outlook BONDS (MAR) 12/03/2004:

The downside crossover (9 below 18) of the moving averages suggests a developing short-term downtrend. Momentum studies are declining, but have fallen to oversold levels. The market's close below the 9- day moving average is an indication the short-term trend remains negative. The market setup is somewhat negative with the close under the 1st swing support. The next downside objective is 108-29. Some caution in pressing the downside is warranted with the RSI under 30. The next area of resistance is around 109-30 and 110-16, while 1st support hits today at 109-05 and below there at 108-29.

TNOTES (MAR) 12/03/2004: Daily stochastics are trending lower but have declined into oversold territory. A negative signal for trend short-term was given on a close under the 9-bar moving average. The market tilt is slightly negative with the close under the pivot. The next downside objective is 109-315. Some caution in pressing the downside is warranted with the RSI under 30. The next area of resistance is around 110-230 and 111-000, while 1st support hits today at 110- 070 and below there at 109-315.

***STOCK INDICES RECAP - 12/3/2004 December

S&P finished up 0.7 at 1190.5, 5 off the high and 3.4 up from the low. December S&P E-Mini closed up 0.75 at 1190.5. This was 3.5 up from the low and 5.25 off the high.

December Dow closed up 9 at 10600. This was 45 up from the low and 45 off the high. December Dow E-Mini finished up 28 at 10614, 25 off the high and 64 up from the low.

The stock market was mostly higher during the session Thursday but it was clear that persistently lower energy price action was beginning to lose its ability to drive stock prices higher. Apparently the stock market was disappointed in retailing projections that were floated Thursday morning. We also think that a number of longs decided to bank profits ahead of the monthly payroll report on Friday. In fact, some traders specifically suggested that a strong payroll reading Friday could end up fostering expectations of many more US rate hikes of the 1/4% caliber. Therefore, the market is a little concerned that too much economic optimism, in the wake of sharp declines in oil prices could mean that the Fed becomes more aggressive.

Technical Outlook S&P 500 (DEC) 12/03/2004: A new contract high was made on the rally. The crossover up in the daily stochastics is a bullish signal. Momentum studies are trending higher but have entered overbought levels. A positive signal for trend short-term was given on a close over the 9-bar moving average. The close over the pivot swing is a somewhat positive setup. The next upside target is 1199.39. The next area of resistance is around 1194.89 and 1199.39, while 1st support hits today at 1186.50 and below there at 1182.60.

SP EMINI (DEC) 12/03/2004: A new contract high was made on the rally. The crossover up in the daily stochastics is a bullish signal. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The market's close above the 9-day moving average suggests the short-term trend remains positive. The market has a slightly positive tilt with the close over the swing pivot. The near-term upside objective is at 1199.81. The next area of resistance is around 1195.12 and 1199.81, while 1st support hits today at 1186.38 and below there at 1182.32.

NASDAQ (DEC) 12/03/2004: The market rallied to a new contract high. The daily stochastics gave a bullish indicator with a crossover up. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The market's short-term trend is positive on the close above the 9-day moving average. It is a mildly bullish indicator that the market closed over the pivot swing number. The near-term upside target is at 1638.87. The 9-day RSI over 70 indicates the market is approaching overbought levels. The next area of resistance is around 1626.75 and 1638.87, while 1st support hits today at 1601.25 and below there at 1587.88.

MINIDOW (DEC) 12/03/2004: A bullish signal was given with an upside crossover of the daily stochastics. 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. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The next upside objective is 10694. The next area of resistance is around 10661 and 10694, while 1st support hits today at 10573 and below there at 10517.

***CURRENCY MARKET RECAP - 12/3/2004

December US Dollar finished up 39 at 8195, 20 off the high and 70 up from the low.

December Euro finished down 0.52 at 132.69, 0.92 off the high and 0.31 up from the low.

December Japanese Yen closed down 0.51 at 96.92. This was 0.19 up from the low and 0.73 off the high.

December Swiss closed down 0.81 at 86.86. This was 0.31 up from the low and 0.77 off the high.

December Canadian Dollar closed down 0.62 at 83.83. This was 0.13 up from the low and 0.92 off the high.

December British Pound finished down 0.99 at 192.16, 1.44 off the high and 0.52 up from the low.

The Dollar finally saw support from an unlikely source, the ECB. Following a regular ECB meeting it seems that an ECB official hinted that further Dollar declines would bring about a response and that quickly inspired a short covering bounce in the Dollar. Also helping to support the Dollar were significant additional declines in energy prices and a mostly positive US equity market trade. We also think that a number of long term Dollar shorts simply decided to bank profits rather than risk the upcoming monthly US payroll report. Therefore, there is a hint of a trend change in the air and possibly the type of economic numbers that would justify a change.

Technical Outlook YEN (DEC) 12/03/2004:

A bearish signal was triggered on a crossover down in the daily stochastics. Momentum studies are trending lower from high levels which should accelerate a move lower on a break below the 1st swing support. A negative signal for trend short-term was given on a close under the 9-bar moving average. The outside day down and close below the previous day's low is a negative signal. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. The next downside target is now at 96.14. The next area of resistance is around 97.37 and 97.97, while 1st support hits today at 96.46 and below there at 96.14.

EURO (DEC) 12/03/2004: The rally brought the market to a new contract high. The daily stochastics have crossed over down which is a bearish indication. Momentum studies trending lower from overbought levels is a bearish indicator and would tend to reinforce lower price action. The close above the 9-day moving average is a positive short-term indicator for trend. The outside day down is somewhat negative. There could be some early pressure today given the market's negative setup with the close below the 2nd swing support. The next downside objective is now at 131.62. With a reading over 70, the 9-day RSI is approaching overbought levels. The next area of resistance is around 133.30 and 134.07, while 1st support hits today at 132.08 and below there at 131.62.

***PRECIOUS METALS RECAP - 12/3/2004 February

Gold closed down 3.6 at 452.3. This was 3.6 up from the low and 5.4 off the high.

March Silver finished down 0.12 at 7.96, 0.275 off the high and 0.045 up from the low.

January Platinum closed up 5.6 at 884.2. This was 7.7 up from the low and 2.8 off the high.

The metals market came under moderate liquidation pressure in the wake of a surprising strong bounce in the US Dollar. With the gold and silver markets both holding record spec and fund long positioning it is not surprising to see minor chart failures foster even more significant chart failures. The threat of intervention was also present following comments from the ECB and seeing a sustained bounce in the Dollar is certainly something that scares the existing longs in gold and silver. Until the Dollar issue is resolved, we suspect that gold and silver might continue to be undermined.

Technical Outlook SILVER (MAR) 12/03/2004:

The daily stochastics gave a bearish indicator with a crossover down. Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The market's short-term trend is positive on the close above the 9-day moving average. The downside closing price reversal on the daily chart is somewhat negative. It is a slightly negative indicator that the close was under the swing pivot. The next downside objective is now at 769.8. The next area of resistance is around 812.0 and 833.8, while 1st support hits today at 780.1 and below there at 769.8.

GOLD (FEB) 12/03/2004: The market rallied to a new contract high. Momentum studies are trending lower from high levels which should accelerate a move lower on a break below the 1st swing support. The market's close above the 9-day moving average suggests the short-term trend remains positive. The market setup is somewhat negative with the close under the 1st swing support. The next downside target is now at 443.8. The next area of resistance is around 456.8 and 461.7, while 1st support hits today at 447.8 and below there at 443.8.

***COPPER MARKET RECAP - 12/3/2004

March Copper finished down 6.45 at 137.50, 5.10 off the high and 0.50 up from the low.

The copper market made what appeared to be the second largest decline of the year which is saying a lot considering the massive break in October. While copper was significantly long and vulnerable to stop loss selling, the break Thursday was thought to be mostly technical in nature. Certainly a slightly higher US Dollar undermines the US copper market and some traders think that prices were excessively overdone around the highs this week. Apparently both the funds and the trade were sellers with the small specs mostly on the sidelines. We also suspect that some longs decided to bank profits ahead of the US payroll report and the weekly Shanghai stocks report Friday morning.

***ENERGY MARKET RECAP - 12/3/2004

January Crude Oil closed down 2.24 at 43.25. This was 0.75 up from the low and 1.35 off the high.

January Heating Oil closed down 7.21 at 125.72. This was 0.97 up from the low and 4.78 off the high.

January Unleaded Gas finished down 5.98 at 114.14, 3.86 off the high and 1.39 up from the low.

January Natural Gas finished down 0.60 at 6.81, 0.59 off the high and 0.12 up from the low.

January Propane closed down 0.05 at 0.79. This was equal to the low and 0.06 off the high.

While the energy complex continued to cave in under small spec and fund long liquidation it would seem that comments from Nigeria added to the downside. Nigeria in a meeting at the White House talked up the potential for increased production with President Bush and that gave the market an added downside push. The market also saw suggestions from Nigeria that a production cut from OPEC next week would send the wrong message to the market and that added to the downside. With the weekly natural gas inventory reading showing a big revision in the prior weeks draw and putting the current draw at only 5 bcf there was even more reason to sell. The natural gas market actually boosted the annual surplus tally on the week from 150 bcf to 240 bcf and that contributed to the slide in prices. OPEC did seem to begin the process of supporting prices (probably because the magnitudes of the declines are now scaring some members). Saudi Arabia said they had not ruled out a production cut in the coming meeting and that at least begins to put some support under the market.

Technical Outlook CRUDE OIL (JAN) 12/03/2004:

The downside crossover of the 9 & 18 bar moving average is a negative signal. 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 gap lower price action on the day session chart is a bearish indicator for trend. The swing indicator gave a moderately negative reading with the close below the 1st support number. The next downside objective is 41.30. Some caution in pressing the downside is warranted with the RSI under 30. The next area of resistance is around 44.30 and 45.50, while 1st support hits today at 42.20 and below there at 41.30.

UNLEADED (JAN) 12/03/2004: Momentum studies are still bearish but are now at oversold levels and will tend to support reversal action if it occurs. The market's close below the 9-day moving average is an indication the short-term trend remains negative. The gap lower price action on the day session chart is a bearish indicator for trend. The market's close below the 1st swing support number suggests a moderately negative setup for today. The next downside objective is 109.51. The 9-day RSI under 30 indicates the market is approaching oversold levels. The next area of resistance is around 116.76 and 120.00, while 1st support hits today at 111.52 and below there at 109.51.

HEATING OIL (JAN) 12/03/2004: Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The market's close below the 9-day moving average is an indication the short-term trend remains negative. More selling pressure is likely given yesterday's gap lower price action on the day session chart. There could be some early pressure today given the market's negative setup with the close below the 2nd swing support. The next downside objective is now at 120.93. The 9-day RSI under 30 indicates the market is approaching oversold levels. The next area of resistance is around 128.59 and 132.42, while 1st support hits today at 122.85 and below there at 120.93.

***CORN MARKET RECAP - 12/3/2004

December Corn finished up 1 at 192 1/2, 1/2 off the high and 1 1/2 up from the low. March Corn closed up 3/4 at 204. This was 1 1/2 up from the low and 1/2 off the high.

A new contract low followed by a higher close could attract short-covering in the corn market. Traditional technical indicators are in an oversold status which helped the market bounce after the poor export sales news failed to generate significant new selling on the move to new lows. Weekly export sales came in at 585,000 tons as compared with 805,000 tons necessary each week to reach the USDA projection and trade expectations for 800,000-1.0 million tons. Japan was the best buyer at 130,200 tons followed by Canada at 88,000 tons. Cumulative sales have reached 38.4% of the USDA forecast for the season as compared with 40.3% on average for this time of the year. Deliveries came in at 950 contracts vs. 1377 contracts yesterday. Support for March corn will emerge at 203 and 200 1/2 with 205 1/2 and 208 3/4 as resistance.

Technical Outlook CORN (MAR) 12/03/2004:

The sell-off took the market to a new contract low. 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. The upside closing price reversal on the daily chart is somewhat bullish. It is a mildly bullish indicator that the market closed over the pivot swing number. The next downside target is now at 201 3/4. With a reading under 30, the 9-day RSI is approaching oversold levels. The next area of resistance is around 205 and 205 3/4, while 1st support hits today at 203 and below there at 201 3/4.

***SOY COMPLEX RECAP - 12/3/2004

January Soybeans finished down 7 1/4 at 520 3/4, 7 3/4 off the high and 1/2 up from the low. March Soybeans closed down 6 1/4 at 525 1/4. This was 1/4 up from the low and 6 3/4 off the high.

January Soybean Oil finished down 0.24 at 20.16, 0.22 off the high and 0.02 up from the low.

January Soymeal closed down 1.6 at 152.0. This was 0.1 up from the low and 1.9 off the high.

January soybeans closed lower for the 6th session in a row for a total loss of over 40 cents on the break. Weak export sales and concerns that China demand has declined due to weaker crush margins helped trigger the early weakness. Weekly export sales came in at 407,100 tons as compared with 285,000 necessary each week to reach the USDA projection and trade expectations for 650,000-850,000 tons. Mexico was the largest buyer for 88,200 tons followed by China at 82,900 tons. Cumulative sales have reached 58.7% of the USDA forecast for the season as compared with 59.4% on average for this time of the year. Weekly sales for meal were 110,600 tons as compared with 50,300 tons necessary each week to reach the USDA projection and trade expectations for 50,000-100,000 tons. Cumulative sales have reached 54.7% of the USDA forecast for the season as compared with 45.4% on average for this time of the year. Oil sales were 9400 tons as compared with 6800 tons necessary each week to reach the USDA projection and trade expectations for 5,000-10,000 tons. Cumulative sales have reached 39.7% of the USDA forecast for the season as compared with 23.7% on average for this time of the year. Oil deliveries were 140 lots vs. 113 lots yesterday and meal at 239 lots, equal to yesterday. Brazil soybean exports for November came in at 485,000 tonnes as compared with 524,300 tons last year. Resistance for January soybeans comes in at 527 and 535 3/4 with 516 and 512 as next support levels.

Technical Outlook BEANS (JAN) 12/03/2004:

Negative momentum studies in the neutral zone will tend to reinforce lower price action. The close below the 9-day moving average is a negative short-term indicator for trend. The close below the 1st swing support could weigh on the market. The next downside target is 514 1/2. The next area of resistance is around 524 3/4 and 530 3/4, while 1st support hits today at 516 3/4 and below there at 514 1/2.

MEAL (JAN) 12/03/2004: 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 market tilt is slightly negative with the close under the pivot. The next downside objective is 151.6. The next area of resistance is around 154.2 and 155.7, while 1st support hits today at 152.2 and below there at 151.6.

BEANOIL (JAN) 12/03/2004: A negative indicator was given with the downside crossover of the 9 & 18 bar moving average. 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. The market setup is somewhat negative with the close under the 1st swing support. The next downside target is now at 20.00. The next area of resistance is around 20.34 and 20.55, while 1st support hits today at 20.07 and below there at 20.00.

***WHEAT MARKET RECAP - 12/3/2004

December Wheat finished down 2 1/2 at 283 1/2, 4 off the high and 1 up from the low. March Wheat closed down 1 1/4 at 296 1/4. This was 1 1/4 up from the low and 3 1/2 off the high.

Slow sales and weakness in soybeans pressured the market to a new contract low early in the session but oversold ideas support a bounce into the mid-session. However, weakness in the other grains and a turn higher in the US dollar helped push the market to a new contract low close. Weekly export sales came in at 336,700 tons as compared with 298,600 tons necessary each week to reach the USDA projection and trade expectations for 300,000-450,000 tons. Egypt was the best buyer at 120,200 tons followed by the Philippines at 51,000 tons. Cumulative sales have reached 69.8% of the USDA forecast for the season as compared with 59.5% on average for this time of the year. As a result of the fast sales pace, the USDA could raise exports and lower ending stocks in the December 10th USDA report. At their weekly tender, Japan bought 110,000 tons of wheat with 45,000 of the total coming from the US. The EU awarded export licenses for 159,000 tonnes of soft wheat at their weekly tender. Resistance for March wheat comes in at the 303 and 308 with 295 and 291 as support.

Technical Outlook WHEAT (MAR) 12/03/2004:

The sell-off took the market to a new contract low. 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. The market's close below the pivot swing number is a mildly negative setup. The next downside target is now at 292 1/4. With a reading under 30, the 9-day RSI is approaching oversold levels. The next area of resistance is around 298 1/2 and 301 1/2, while 1st support hits today at 294 and below there at 292 1/4.

KC WHEAT (MAR) 12/03/2004: Momentum studies are still bearish but are now at oversold levels and will tend to support reversal action if it occurs. The market's short-term trend is negative as the close remains below the 9-day moving average. The close below the 1st swing support could weigh on the market. The next downside target is 319. The 9-day RSI under 30 indicates the market is approaching oversold levels. The next area of resistance is around 328 and 333, while 1st support hits today at 321 and below there at 319.

MN WHEAT (MAR) 12/03/2004: A bullish signal was given with an upside crossover of the daily stochastics. Rising from oversold levels, daily momentum studies would support higher prices, especially on a close above resistance. The market's close below the 9-day moving average is an indication the short-term trend remains negative. The close over the pivot swing is a somewhat positive setup. The near-term upside objective is at 350 1/2. The 9-day RSI under 30 indicates the market is approaching oversold levels. The next area of resistance is around 346 3/4 and 350 1/2, while 1st support hits today at 340 1/4 and below there at 337 3/4.

***LIVE CATTLE RECAP - 12/3/2004

February Live Cattle closed down 0.87 at 88.00. This was 0.45 up from the low and 0.55 off the high.

January Feeder Cattle finished down 1.17 at 102.10, 0.80 off the high and 0.30 up from the low.

The dry forecast for the central and southern plains along with concerns that US producers may try to dump cattle on the market before the border opens with Canada were factors which helped drive cattle futures sharply lower on the session. Boxed-beef cut-out values were up $1.27 at mid-session to $149.39 as compared with $138.38 last week at this time. The surge in beef prices could help support packer margins and allow packers to pay higher in the cash market next week. Selling intensified due to the bearish technical action this week.

Technical Outlook CATTLE (FEB) 12/03/2004:

The market back below the 40-day moving average suggests the longer-term trend could be turning down. The daily stochastics gave a bearish indicator with a crossover down. Stochastics trending lower at midrange will tend to reinforce a move lower especially 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 swing indicator gave a moderately negative reading with the close below the 1st support number. The next downside objective is 87.050. The next area of resistance is around 88.500 and 89.020, while 1st support hits today at 87.520 and below there at 87.050.

***LEAN HOGS RECAP - 12/3/2004

February Lean Hogs closed up 0.02 at 75.92. This was 0.92 up from the low and 0.52 off the high.

February Pork Bellies finished up 0.67 at 100.77, 0.32 off the high and 1.12 up from the low.

February hogs opened higher on the session at 76.10 and collapsed all the way to 75.00 before finding support and rallied above the opening late in the session as the solid gains in pork values this week and the discount of futures to cash helped support. The CME 2-Day Lean Index for the period ending November 30th was reported at 77.98, up 60 cents from the previous session and down from 78.20 last week at this time. While cash has been steady over the past week and higher over the past few days, the surge higher in pork values has helped to keep packer demand strong.

Technical Outlook HOGS (FEB) 12/03/2004:

Momentum studies trending lower from overbought levels is a bearish indicator and would tend to reinforce lower price action. The market's short-term trend is positive on the close above the 9-day moving average. It is a slightly negative indicator that the close was lower than the pivot swing number. The next downside objective is now at 74.370. The next area of resistance is around 76.620 and 77.250, while 1st support hits today at 75.200 and below there at 74.370.

***COCOA MARKET RECAP - 12/3/2004

March Cocoa finished down 7 at 1652, 25 off the high and 20 up from the low.

The cocoa market failed to respond to a couple bullish fundamental stories floated Thursday during the session. First of all a private forecast suggested that the coming Ivory Coast harvest might be down by up to 200,000 tons from the prior record production due to lower inputs by farmers. Supporting prices during the session were reports of fund buying in London but that rally was basically thwarted by increased origin selling. We suspect that ongoing African Peace efforts continue to foster the illusion of calm at the Ivory Coast and that seems to make the sellers a little more confident.

Technical Outlook COCOA (MAR) 12/03/2004:

The daily stochastics have crossed over up which is a bullish indication. Momentum studies are trending higher from mid-range, which should support a move higher if resistance levels are penetrated. The close above the 9-day moving average is a positive short-term indicator for trend. The daily closing price reversal down is a negative indicator for prices. It is a slightly negative indicator that the close was under the swing pivot. The near- term upside objective is at 1698. The next area of resistance is around 1674 and 1698, while 1st support hits today at 1630 and below there at 1609.

***COFFEE MARKET RECAP - 12/3/2004

March Coffee closed down 0.80 at 97.80. This was 1.10 up from the low and 4.70 off the high.

March coffee closed 80 points lower on the session but 470 points off of the highs of the day. The sweeping reversal from contract highs could signal a near- term top; especially if fund traders decide to exit part of their record high net long position. London futures closed higher but the focus of attention in New York was on the long liquidation trend. For October, the first month of the 2004/2005 season, exporting countries of the International Coffee Organization exported 7.023 million bags as compared with 6.465 million bags last year. Traders on the floor indicated some increased producer selling in the pit but there was a lack of buying support from roasters.

Technical Outlook COFFEE (MAR) 12/03/2004:

The market rallied to a new contract high. A bearish signal was triggered on a crossover down in the daily stochastics. Daily stochastics turning lower from overbought levels is bearish and will tend to reinforce a downside break especially if near-term support is penetrated. A positive signal for trend short-term was given on a close over the 9-bar moving average. The daily closing price reversal down is a negative indicator for prices. The market's close below the pivot swing number is a mildly negative setup. The next downside target is now at 92.90. The market is becoming somewhat overbought now that the RSI is over 70. The next area of resistance is around 100.65 and 104.45, while 1st support hits today at 94.90 and below there at 92.90.

***SUGAR MARKET RECAP - 12/3/2004

March Sugar closed down 0.08 at 8.82. This was 0.01 up from the low and 0.14 off the high.

March sugar closed 8 lower on the session and down to the lowest close since November 19th which leaves futures vulnerable to long liquidation selling. Producer selling emerged to push the market lower on the day and then speculative long liquidation selling helped drive the market lower. The lack of new business in the cash market leaves futures vulnerable to a significant technical correction unless trade house buying emerges to support the market soon. With speculators holding a net long position of near 126,000 contracts in the last traders report, long liquidation could intensify on a break. Brazil sugar exports in November were reported at 1.55 million tons, up 42% from last years pace.

Technical Outlook SUGAR (MAR) 12/03/2004:

A bearish signal was triggered on a crossover down in the daily stochastics. 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 downside closing price reversal on the daily chart is somewhat negative. The swing indicator gave a moderately negative reading with the close below the 1st support number. The next downside objective is now at 8.71. Daily studies pointing down suggests selling minor rallies. The next area of resistance is around 8.89 and 9.00, while 1st support hits today at 8.75 and below there at 8.71.

***COTTON MARKET RECAP - 12/3/2004

March Cotton finished down 0.27 at 43.62, 0.28 off the high and 0.32 up from the low.

March cotton pushed lower early in the session as the positive news from the weekly sales report was not enough to offset the technical selling and new fund selling on the market. Improving weather in the West Texas region for harvest added to the bearish tone. Weekly export sales came in at 206,000 bales as compared with trade expectations for 150,000-220,000 bales. Cumulative sales have reached 59.2% of the USDA forecast for the season as compared with 65.3% on average for this time of the year. Export shipments for the week came in at 143,100 bales from trade expectations at 130,000-175,000 bales. West Africa production was pegged at 4.72 million bales for the 2004/2005 season which is up 6% from last year. Certified cotton stocks deliverable to the exchange as of December 1st totaled 81,442 bales from 76,482 bales two days ago.

Technical Outlook COTTON (MAR) 12/03/2004:

Momentum studies are rising from mid-range, which could accelerate a move higher if resistance levels are penetrated. The close below the 9-day moving average is a negative short-term indicator for trend. The market tilt is slightly negative with the close under the pivot. The near-term upside objective is at 44.20. The next area of resistance is around 43.91 and 44.20, while 1st support hits today at 43.32 and below there at 43.01.

***This report includes information from sources believed to be reliable and accurate as of the date of this publication, but no independent verification has been made and we do not guarantee its accuracy or completeness. Opinions expressed are subject to change without notice. This report should not be construed as a request to engage in any transaction involving the purchase or sale of a futures contract and/or commodity option thereon. The risk of loss in trading futures contracts or commodity options can be substantial, and investors should carefully consider the inherent risks of such an investment in light of their financial condition. Any reproduction or retransmission of this report without the express written consent of Hartfield Management, Inc. is strictly prohibited.