The Hightower Report

STOCKS: Ongoing fears of slowing should leave the bears with an edge this week
BONDS: Expect close in support to hold as more slowing evidence surfaces
CURRENCIES: More minor Dollar gains but the Yen is the primary leadership mkt
COPPER: January rally is overdone look for a correction this week
METALS: A minor downward bias seen mostly off sagging economic sentiment
CATTLE: Less beef and other meat but still no sign of low in cash; chop
HOGS: Could see more back and fill as premium is extracted; chop for now
BEANS: Commitments of Traders confirms net fund buying. This is supportive.
CORN: Corn is due for a corrective break barring a surprise from the USDA.
WHEAT: Wheat may have run out of gas, but this should be temporary.
ENERGY: Weak economic demand environment/high stocks offsetting geopolitical risk
COTTON: Demand news still in question; USDA reports to set tone today
COFFEE: Look set for uptrend in 2009; Colombia cash already tight; more up
SUGAR: Will need help from outside markets to see uptrend; 12.51 resistance
COCOA: Under pressure from weak Pound, test of lower end of range likely

STOCKS: The numbers should be bad but the market is expecting a bad number
BONDS: Without stimulus talk prices would have already rejected recent lows
CURRENCIES: Look to fade the initial reaction to the US payroll data
COPPER: Its hard not to expect a wave of selling after the numbers today
METALS: At least an initial dip but anxiety won’t be erased today
CATTLE: More base-building before turn up as lower meat production to support
HOGS: High futures premium to cash but cash trend up; hams on fire
BEANS: Fund buying reappeared yesterday after a 1-day hiatus. Correction over?
CORN: Corn has a greater likelihood of a correction than wheat or soybeans.
WHEAT: Major reports are due out on Monday. Above all, we would not get short.
ENERGY: Employment sets early tone, but bounce possible if payroll decline shallow
COTTON: Longer-term supply fears and a lack of demand fears due to stimulus
COFFEE: Outside market forces could impact but fundamentals more look positive
SUGAR: Positive inflation outlook continues to provide underlying support
COCOA: Employment report may be the catalyst that triggers move out of range

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The market seems to have the short-term supply/demand fundamentals to move substantially lower but inflationary expectations are high and traders remain concerned that the market will not produce enough cotton for the 2009/2010 season and that stocks will tighten dramatically. Speakers at the annual Beltwide cotton conference this week are talking about lower planted acreage for the coming year in the US and a trade house yesterday predicted that China plantings could also fall by as much as 17% which could significantly tighten supply within China and open the door for increasing imports if textile demand were to recover. This seems to be a big “if” as global economic conditions seem to be still deteriorating. Estimates on US plantings this year seem to be closer to 8.5 to 9.0 million acres. The compares with 9.41 million last year, 10.83 million the previous year and 15.27 million acres in 2006. March cotton followed the pattern set by other commodity markets yesterday such as the grains by trading lower. However, cotton differed in that its losses were not as sharp as in a number of other commodity markets, and cotton did not move into new low ground late in the day. Funds were sellers in cotton, as was the case in a number of other commodity markets. Traders said that crude oil was one of the keys as that market remained under pressure. Renewed concerns about the slowing US and world economy stemmed from weak jobs data and a sharply lower stock market among other factors. As usual, this generated concern over renewed demand destruction for consumer goods containing cotton fiber. Monsanto announced today that it would market 5 new seeds that have shown sharply higher yield potential in field trials.

TODAY’S GUIDANCE: The short-term demand fundamentals appear to be worsening but the market is fearing lower production ahead.

STOCKS: The bears have control as longs flee to the sidelines ahead of payrolls
BONDS: Near term vulnerable in Treasuries but selling should abate today
CURRENCIES: Expect the Yen, Swiss and Euro to hold near term favor
COPPER: At least a couple of down days ahead for copper
METALS: The bear camp seems to hold an edge off fresh fears of slowing
CATTLE: Weaker than expected demand pushing beef, and maybe cash lower; weak
HOGS: Premium too high in weak commodity environment; chop lower for now
BEANS: Complex due for correction. Funds may not be enough to pull us higher.
CORN: A correction is finally underway. It should continue to take corn lower.
WHEAT: We’re getting a much-needed pause/pullback. Wheat could still go lower.
ENERGY: Without the Russian issue prices would be under significant pressure
COTTON: Weak demand clashing with longer-term supply fears; chop
COFFEE: Coffee demand hangs in well during recession and tech action bullish
SUGAR: Swings from inflation to deflation concerns due to demand undertones
COCOA: Economic data over next 2 session likely to test the bull camp’s resolve

STOCKS: The bulls have long term bullish sentiment in their court today
BONDS: The bears retain the edge mostly because of lingering economic optimism
CURRENCIES: The Dollar to remain strong which helps the Pound and C$
COPPER: Economic optimism to rule even if it isn’t justified
METALS: The bears continue to control as $ action outweighs inflation talk
CATTLE: Positive supply set-up but dollar strength and weather may limit
HOGS: Cash needs to rally or big premiums will limit support; up for now
BEANS: The consolidation “pause” was short. Specs are not short. Up we go.
CORN: Corn is a follower, but it should follow other markets on the way up.
WHEAT: Wheat gave us a directional indicator yesterday, and it was up.
ENERGY: Improved macro economic views means demand shorts will exit
COTTON: Funds keep buying and inflation and stimulus bulls are on their side
COFFEE: Oversold with inflationary expectations on the rise; short-covering?
SUGAR: Bullish technical action as bulls see inflation as the likely outcome
COCOA: Currency fluctuation will keep price action choppy, wait to buy on dips

STOCKS: The bulls retain the edge because of pre-existing momentum
BONDS: Minor follow through declines possible due to momentum
CURRENCIES: Choppy action still present expect near term Euro & C$ declines
COPPER: The bulls have a minor edge today mostly off technicals issues
METALS: The bears have a slight edge this morning mostly off profit taking
CATTLE: Positive supply set-up ahead; buy breaks; April to 94.65
HOGS: More positive set-up for early 2009 and technical reversal; firm
BEANS: Wednesday saw the 2nd “Santa rally” in a week. Reaction set-back today?
CORN: Possible setback today, but the top does not appear to be in yet.
WHEAT: Fund buying and a strong international market may be dominant factors.
ENERGY: The overall trend remains down off building supply and sagging demand
COTTON: Slow demand and weak economic conditions may spark turn down soon
COFFEE: Positive set-up for 2009 with oversold condition and tightening supply
SUGAR: Investment demand on the rise but demand may be lacking; chop
COCOA: As long as supply outlook is tight, price dips should attract buyers

STOCKS: A slight bullish bias off the GMAC help and year end psychology
BONDS: Continue to buy corrections down to consolidation support
CURRENCIES: More Swiss and Euro domination directly ahead
COPPER: The trade remains down look to sell recovery bounces
METALS: Expect a minor correction into the US numbers and then a recovery
CATTLE: Vulnerable to short-covering; managed funds net short 15,086
HOGS: Position traders can wait for further sell-off to 58.02 Feb, 66.27 April
BEANS: Higher prices finally sparked farmer selling to make a temporary high.
CORN: We’ve gone about as far as we can go – for now. But corn is still a buy.
WHEAT: Cash wheat selling trumped bullish technicals yesterday. Time to pause.
ENERGY: Weak global oil demand will ultimately outweigh temporary geopolitical fears
COTTON: Funds still long and cotton still in uptrend channel; more down?
COFFEE: Shift to tighter supply in 2009; smaller crops Brazil and Vietnam
SUGAR: Probing for a near-term low but index fund buying may limit downside
COCOA: Fundamentals still bullish but vulnerable to year end profit taking

STOCKS: One gets the sense that the bull camp retains a slight edge today
BONDS: Continue to buy breaks expecting more evidence of slowing ahead
CURRENCIES: Expect the Swiss and Euro to dominate the US Dollar ahead
COPPER: Without year end short covering hopes the bulls have no case
METALS: The bulls have control as anxiety trumps economic news flow
CATTLE: Poor export news and disappointing cash news; buy breaks
HOGS: Still probing for near-term low; swing count down to 58.02 Feb
BEANS: Same list of fundamentals are lining up in support. Objective: 1045
CORN: Technical & investor support outweighing weak demand. This may continue.
WHEAT: A push through 608 overnight puts March objective at 650 or better.
ENERGY: Yr end short covering, geopolitical fears to provide temporary lift
COTTON: Still in position to see worsening demand news ahead; more down
COFFEE: Shift to tighter supply in 2009 may be good foundation for rally
SUGAR: Outside market forces support early but what about global demand
COCOA: Vulnerable to year end profit taking in thin market conditions

STOCKS: Look to sell rallies as traders should fear upcoming job losses
BONDS: The overall trend remains up but holiday action could diffuse the trend
CURRENCIES: Choppy trade expected as the economic report slate is empty
COPPER: The trend is down look to sell 300 point rallies
METALS: Two sided action unless Dollar losses become more severe
CATTLE: Cash tone positive and tightening supply ahead to support uptrend
HOGS: Probing for near-term low; swing count down to 58.02 Feb; low soon?
BEANS: Weather market for now as China and Argentina dryness support uptrend
CORN: Not enough rain in Argentina and China building reserve; firm
WHEAT: Overbought and right on key resistance; following other grains
ENERGY: Short covering action should be seen as a selling opportunity
COTTON: Econ news may be bad enough to spark another round of spec liquidation
COFFEE: Big world production deficit expected for 2009 to turn trend up
SUGAR: Short-term trend looks to remain down due to weak demand; liquidation
COCOA: Tight supply situation should attract fresh buyers on price dips

STOCKS: Expect a dip following the #’s, with a weak muted mid morning bounce
BONDS: The trend remains up, look to buy breaks to this week’s lows
CURRENCIES: Expect US data to rekindle pressure on the US Dollar today
COPPER: Continue to sell rallies looking for even lower lows ahead
METALS: The bears look to have the initial edge today
CATTLE: Watch for continued uptrend into 2009; buy at channel support
HOGS: Probing for near-term low; big storage stocks; premium
BEANS: Advance continues as traders even up ahead of Christmas
CORN: Yesterday’s rally tells us there’s no selling until farmers make a move.
WHEAT: Wheat may have had its correction. The path of least resistance is up.
ENERGY: The bears retain control unless steep $ losses save the bull camp
COTTON: Sideways action but weak demand news could spark more selling ahead
COFFEE: After recent active selling, coffee poised to move higher next year
SUGAR: More long liquidation selling into the end of the year; chop down
COCOA: Pre-holiday profit taking, thin conditions could make for a volatile trade