FROSTY FUTURES
APRIL 19, 2005

"Extract from The Hightower Report"
www.futures-research.com

SUGAR: Sell 1 October sugar 850 call near 46 and buy 3 of the October 950 calls at 17 each.
CRUDE OIL: Buy a June Crude 49 put for 97 and buy a July crude 55.50 call for 205 points. Use an objective of *210 on the June put and an objective of 580 on the July call.
BONDS: Long 4 June bond 109 puts for 57, Long 1 June bond at 110-20. *Hit objective of 111-11 on the futures for a gain of 22 ticks. Keep an objective of 2-29 ticks on the 109 puts. Risk a total of $2,000.
PRECIOUS METALS: Remain Long June gold at 444. *Took off the 465 call for a gain of 1.70. *Took profits on the 430 put from 500 at 750 for a gain of 2.50, took minimal profit on the short 440 call +.60, net options offset is now 4.80.
Remain long the futures from $444 with an objective of *$432 and a risk of $426.6.

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Today's Market Roundup - 04/19/05
***BONDS - TODAY'S MARKET IDEAS: Aggressive traders should be ready to buy 16 tick breaks right into the PPI and housing starts reports.
NEW RECOMMENDATIONS: Long 4 June bond 109 puts for 57, Long 1 June bond at 110-20. *Hit objective of 111-11 on the futures for a gain of 22 ticks. Keep an objective of 2-29 ticks on the 109 puts. Risk a total of $2,000.
PREVIOUS RECOMMENDATIONS: None.
***STOCKS - TODAY'S MARKET IDEAS: Some traders think the market was overly pessimistic toward the economy and therefore it could take a couple days worth of sagging numbers and higher oil prices for the market to resume its downward action.
NEW RECOMMENDATIONS: None.
PREVIOUS RECOMMENDATIONS: None.
***CURRENCIES - TODAY'S MARKET IDEAS: None.
NEW RECOMMENDATIONS: None.
PREVIOUS RECOMMENDATIONS: Long June Dollar from 83.60, *Hit the profit stop at 84.85. Long the June Euro 127.50 put for 90, *Hit profit stop of 110.
***ENERGIES - TODAY'S MARKET IDEAS: None.
NEW RECOMMENDATIONS: Buy a June Crude 49 put for 97 and buy a July crude 55.50 call for 205 points. Use an objective of *210 on the June put and an objective of 580 on the July call.
PREVIOUS RECOMMENDATIONS: 1) Long a June 49.00 put for 40/Long July crude 60 call for 195. *Hit objective of *100 on the June 49.00 put for a 60 point profit, hold the July call with an adjusted net cost of 95 points. 2) Long 10 September
$44.50 crude oil puts for 58, Long Sept crude oil futures $57.40. Use an objective of $59.90 on the long futures and an objective of 350 on the puts. Use an objective of 100 on 2 puts and hold the remaining position. Risk the position to
a net combination loss of $4,000.
***PRECIOUS METALS - TODAY'S MARKET IDEAS: We think an initial buying wave off the PPI report will wane and that the inflation tilt will give way to a firmer Dollar impact.
NEW RECOMMENDATIONS: Remain Long June gold at 444. *Took off the 465 call for a gain of 1.70. *Took profits on the 430 put from 500 at 750 for a gain of 2.50, took minimal profit on the short 440 call +.60, net options offset is now 4.80.
Remain long the futures from $444 with an objective of *$432 and a risk of $426.6.
PREVIOUS RECOMMENDATIONS: None.
***COPPER - TODAY'S MARKET IDEAS: Outside market forces slightly improved but still no clear signs of renewed Chinese physical interest.
NEW RECOMMENDATIONS: None.
PREVIOUS RECOMMENDATIONS: Long July copper on a slide to 141.30, *Hit the profit stop to 142.90.
***SOYCOMPLEX - TODAY'S MARKET IDEAS: There seems to be plenty of bearish fundamental news but the market has held well. The market may need a weather reason to turn back up as increasing supply from South America could pressure.
The choppy to lower trend is likely to continue over the near-term with 619 1/2 resistance and 599 1/4 support for May futures. Option traders could sell July futures and buy 2 July 640 calls. Lift futures at 578 1/2 for a free look at the start of the growing season ahead.
NEW RECOMMENDATIONS: None.
PREVIOUS RECOMMENDATIONS: Short June soybean 640 call from 15 1/2 with an objective of 0. * Move risk to 14.
***CORN - TODAY'S MARKET IDEAS: Prices look cheap and the market looks oversold but demand problems for US corn are serious and weather is ideal. July corn selling resistance is at 215 and we still can not rule out another leg down to 198 for July corn. Consider selling the July 220 call near 6 1/2 and buy the 210 put near 7.
NEW RECOMMENDATIONS: None.
PREVIOUS RECOMMENDATIONS: Long 4 September corn 280 calls and short 1 September corn 240 call at +11 premium paid. Objective +39 cents. Risk a total of 8 cents.

Long 3 July corn 250 calls for 8 each and took 11 1/2 cent gain on short July futures. Hold calls for now. Long December corn 260 call from 10 and long July corn 210 put for 6 1/2 cents. Sell the 210 put for a 12 1/2 and hold the December
call.
***WHEAT - TODAY'S MARKET IDEAS: Bigger crops in India and China suggest less concern for US crop size. No reason at present to believe February lows will hold. Look for test of February lows soon.
NEW RECOMMENDATIONS: None.
PREVIOUS RECOMMENDATIONS: Short 1 September wheat 330 call from 22 and long 3 September 370 calls for 9 each.
***CATTLE - TODAY'S MARKET IDEAS: With cash in an uptrend and June discounted to cash, consider selling out of the money puts to capture premium in a sideways to higher market ahead. Consider selling the June 81 put near 77 points. June cattle buying support comes in at the 50-day moving average at 83.97 today with 86.90 as upside objective.
NEW RECOMMENDATIONS: None.
PREVIOUS RECOMMENDATIONS: Long June cattle from 84.10 with an objective of 86.90. Risk to 83.37.
***HOGS - TODAY'S MARKET IDEAS: A few extra Canadian hogs along with higher than expected production and weak packer margins leave hogs in a long liquidation mode. Resistance for June hogs is 77.20 with 75.70 as next support. Wait for
the sell-off to run its course before buying.
NEW RECOMMENDATIONS: None.
PREVIOUS RECOMMENDATIONS: NONE.
***COTTON - TODAY'S MARKET IDEAS: The fundamentals are questionable but the technical action remains bullish. December cotton support comes in at 55.55 and a close over 56.62 should be enough to project another push higher to 60.17 as
next upside objective.
NEW RECOMMENDATIONS: None.
PREVIOUS RECOMMENDATIONS: None.
***COFFEE - TODAY'S MARKET IDEAS: July coffee buying support levels include 114.50 and 110.45 with resistance up at 123.80. A move over 117.85 might confirm a near-term low. Consider buying the August 120/140 bull call spread.
NEW RECOMMENDATIONS: None.
PREVIOUS RECOMMENDATIONS: None.
***COCOA - TODAY'S MARKET IDEAS: None.
NEW RECOMMENDATIONS: None.
PREVIOUS RECOMMENDATIONS: Long July cocoa on a break down to $1,550, *Hit tight stop at $1,530.
***SUGAR - TODAY'S MARKET IDEAS: Key support for July sugar is down at 814 and for October sugar down at 818 and the market is likely to begin to show some stability near these prices. Consider buying breaks with 861 July and 873 October as resistance.
NEW RECOMMENDATIONS: Sell 1 October sugar 850 call near 46 and buy 3 of the October 950 calls at 17 each.
PREVIOUS RECOMMENDATIONS: None.

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Today's Headline Summary

FUNDAMENTAL:
STOCKS: MINOR SHORT COVERING BUT GM, FORD, UNITED & AMERICAN PROBLEMS REMAIN
BONDS: THE MARKET IS SOMEWHAT OVERDONE BUT THE FUNDAMENTAL TREND REMAINS UP
CURRENCIES: THE ONLY DEFINITIVE TREND WOULD SEEM TO BE A STRONG POUND
COPPER: IN THE ABSENCE OF CHINESE ACTIVITY LOOK TO EQUITY PRICES FOR DIRECTION
METALS: INITIAL RALLY SPUTTERS AND THE FOCUS TURNS BACK TOWARD THE DOLLAR
CATTLE: FEAR OF RISING SUPPLY BUT DISCOUNT MARKET WITH INCREASING DEMAND AHEAD
HOGS: NO SIGN OF LOW WITH AMPLE SUPPLY AND WEAK PACKER DEMAND; LIQUIDATION
BEANS: CHOPPY RANGE; CONSIDER SELLING 1 FUTURES AND BUYING 2 CALLS; FREE LOOK?
CORN: SERIOUS DEMAND PROBLEMS FOR US CORN; COULD BE TEMPORARY BUT EXPORTS SLOW
WHEAT: NO SIGN OF SUPPORT WITH BIG WORLD CROPS; CROP CONDITIONS DOWN SLIGHTLY
ENERGY: STILL NO SIGN OF A BOTTOM ESPECIALLY WITH WEEKLY INVENTORIES AHEAD
COTTON: BULLISH TECHNICAL ACTION; CALIFORNIA PLANTINGS ACTIVE; CHINA BUYING
COFFEE: CLOSE TO BOTTOMING AND SHOULD BEGIN ANOTHER LEG HIGHER SOON
SUGAR: PROBING FOR LOW; BUY BREAKS OR CONSIDER CALL SPREADS; BASEBUILDING
COCOA: LESS AGGRESSIVE DOWNSIDE TILT BUT THE BEARS SHOULD MAINTAIN CONTROL

TECHNICAL:
BEANS: STILL IN A RENGE BUT WEAK CLOSE SUGGEST TEST OF BOTTOM END
CORN: FAILED UPSIDE BREAKOUT RETEST OF 2.10 AGAIN
WHEAT: A CLOSE UNDER 311 PUTS 302 1/4 AS NEXT SUPPORT
CATTLE: FEW CLUES ON DIRECTION UNTIL BREAK OUT OF 85.24-83.40 ZONE
HOGS: LOWER HIGHS AND LOWER LOWS SINCE MAR TOP SUGGEST BREAKOUT DOWN
SUGAR: STOCHASTIC DIVERGENCE SUGGEST A TEMP LOW IN PLACE
COTTON: MAY NOW HAVE THE MOMENTUM TO PUSH THROUGH 55.10
ENERGY: ANOTHER POOR CLOSE KEEPS JUN CRUDE ON TRACK TO TEST $50
METALS:DESPITE REBOUND JUN GOLD STILL HAS SOLID RESISTANCE AT $432
FORX: WEAK DOLLAR CLOSE UNDER 84 IS BEARISH
BONDS: BECOMING OVER BOUGHT UPSIDE MOMENTUM MAY BE TIRING
S&P: STRONG RECOVERY OFF LOW MAY BE SIGNALING CLASSIC BOTTOMING ACTION



****** DAILY ENERGY COMPLEX COMMENTARY
04/19/05

STILL NO SIGN OF A BOTTOM ESPECIALLY WITH WEEKLY INVENTORIES AHEAD

OVERNIGHT CHANGES THROUGH 4:00 AM:
CRUDE +45, HEATING +97, UNLEADED +171

At times Monday the energy complex seemed to be poised to forge a bottom, especially when prices failed to slide on the talk from OPEC that they would possibly consider a May production ceiling increase of 500,000 barrels per day. During the session yesterday, the unleaded market showed signs of bottoming but in the end the bear camp seemed to maintain control. Apparently a small refinery problem in Kansas sparked the bounce, which in a sense shows that the market is still capable of bottoming off a minimal supply glitch. However, in the near term, we suspect that concern over the economy will leave the oil market vulnerable to additional selling, especially as we come into the next weekly US inventory report on Wednesday. In fact, during the session Monday, the Press was suggesting that some players were fearful of an inventory induced break on Wednesday and that serves to keep us in the bear camp for at least another session. Some suggest that comments from OPEC on Monday, regarding oil prices getting close to a "fair value", show that OPEC is acknowledging the potential for more price declines, but the comments also hint that OPEC might be inclined to draw a line in the sand, at some point underneath the current market. In the mean time, talk that OPEC might increase May supply flow, instead of
increasing production quotas, combines with news that Iraq is expected to resume northern oil exports later this week, to keep the price pendulum pointing downward.
While the energy complex remains concerned about the macro economic condition, stock prices on Monday did manage to recovery a little and are showing some minor strength today and that seems to have taken some pressure off the energy
market.
In the event that stocks slide aggressively today, under the weight of the PPI release today, that could rekindle the pressure on energies and push prices back below the late February consolidation lows. In the coming week, a deflated
price for crude oil might be as low as $50.00 in the June crude contract and as low as 148.00 in June unleaded.

NATURAL GAS: The natural gas market seemed to garner some support off the $7.00 level basis the June contract but as long as crude oil remains suspect, we doubt that natural gas will be able to avoid the negative outside influences. Apparently
the recent weekend demand was ultra light, with a large portion of the Midwest seeing very mild temps to hot temperatures and that means that upcoming injections could be larger than expected, which in turn to add to the recent weight on prices. With temps expected to remain mild, it would seem like internal fundamentals in natural gas will remain slightly bearish. It is interesting to note that June Natural gas temporarily fell below the critical 50 day moving average on Monday, but that the market seemingly bounced from the level. Today the 50 day moving average comes in at 7.01 basis the June contract. It might take a slide all the way down to $6.78 to effectively level the spec long position in natural gas, considering that the non-reportable position still held 35,000 contracts as of last Tuesday's close.

TODAY'S MARKET IDEAS:
None.

NEW RECOMMENDATIONS:
Buy a June Crude 49 put for 97 and buy a July crude 55.50 call for 205 points. Use an objective of *210 on the June put and an objective of 580 on the July call.

PREVIOUS RECOMMENDATIONS:
1) Long a June 49.00 put for 40/Long July crude 60 call for 195. *Hit objective of *100 on the June 49.00 put for a 60 point profit, hold the July call with an adjusted net cost of 95 points. 2) Long 10 September $44.50 crude oil puts for 58, Long Sept crude oil futures $57.40. Use an objective of $59.90 on the long futures and an objective of 350 on the puts. Use an objective of 100 on 2 puts and hold the remaining position. Risk the position to a net combination loss of $4,000.

TECHNICAL OUTLOOK:
Note: Technical commentary is based solely on statistical indicators and does not necessarily correspond to any fundamental analysis that may appear elsewhere in this report.

ANOTHER POOR CLOSE KEEPS JUN CRUDE ON TRACK TO TEST $50

CRUDE OIL (JUN) 04/19/2005: Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The major trend has turned down with the cross over back below the 18-day moving average. The swing indicator gave a moderately negative reading with the close below the 1st support number. The next downside objective is 50.16. Some caution in pressing the downside is warranted with the RSI under 30. The next area of resistance is around 52.19 and 53.04, while 1st support hits today at 50.75 and below there at 50.16.

HEATING OIL (JUN) 04/19/2005: Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The major trend has turned down with the cross over back below the 18-day moving average. The close below the 1st
swing support could weigh on the market. The next downside objective is 141.13. The next area of resistance is around 146.74 and 149.12, while 1st support hits today at 142.75 and below there at 141.13.

UNLEADED (JUN) 04/19/2005: The cross over and close above the 60-day moving average is an indication the longer-term trend has turned positive. Momentum studies are declining, but have fallen to oversold levels. The close under the 18-day moving average indicates the longer-term trend could be turning down. 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 147.23. The next area of resistance is around 152.85 and 154.62, while 1st support hits today at 149.15 and below there at 147.23.

NATURAL GAS (JUN) 04/19/2005: Momentum studies are declining, but have fallen to oversold levels. The market back below the 18-day moving average suggests the longer-term trend could be turning down. A negative signal was given by the outside day down. The close below the 1st swing support could weigh on the market. The next downside objective is 6.872. The next area of resistance is around 7.144 and 7.252, while 1st support hits today at 6.954 and below there at 6.872.


***** ENERGY COMPLEX TECHNICAL STATISTICS
CALCULATIONS BASED ON PREVIOUS DAY SESSION CLOSES
DATA SOURCES CAN & DO PRODUCE BAD TICKS. VERIFY BEFORE USE.
14 DAY 14 DAY
9 DAY 14 DAY SLOW SLOW 20 DAY 40 DAY 60 DAY
CLOSE RSI RSI STOCH D STOCH K M AVG M AVG M AVG
ENERGY COMPLEX
CLM5 51.47 29.59 36.79 18.62 10.22 55.18 54.67 52.40
HOM5 144.75 36.76 43.34 18.88 11.24 152.74 147.74 139.95
HUM5 151.00 33.58 40.17 17.68 9.68 161.33 156.97 150.70
NGM5 7.049 34.26 41.79 22.77 13.30 7.43 7.19 6.90
LGM5 82.50 33.77 41.63 13.56 5.46 86.80 84.90 80.97

DAILY SUPPORT AND RESISTANCE LEVELS
BASED ON DAY SESSION CLS - VERIFY BEFORE USE (DATA SUBJECT TO ERRORS)
SUPRT 2 SUPRT 1 PIVOT RESIST 1 RESIST 2
ENERGY COMPLEX
CLM5 CRUDE OIL 50.16 50.75 51.60 52.19 53.04
HOM5 HEATING OIL 141.12 142.74 145.12 146.74 149.12
HUM5 UNLEADED 147.22 149.15 150.92 152.85 154.62
NGM5 NATURAL GAS 6.872 6.954 7.062 7.144 7.252
LGM5 LIQUIDGAS 82.50 82.50 82.50 82.50 82.50



****** DAILY COCOA COMMENTARY
04/19/05

LESS AGGRESSIVE DOWNSIDE TILT BUT THE BEARS SHOULD MAINTAIN CONTROL

The cocoa market did manage another new low for the move to start the week, but also managed to recoil away from that low and climb above the prior day's close. After last week's slightly lower US 1st quarter Grind release we are a little
surprised to see cocoa prices bounce off the recent lows. With the macro economic condition deteriorating and the fund traders possibly back on their heels, we have to think that the near term path of least resistance is pointing downward.
Also dampening near term price prospects in cocoa is the fact that the rebels appear to be poised to disarm and were also reported to be ready to rejoin the Ivory Coast government. At least for the time being, the prospect of a violence premium is downplayed and that should leave the market to consider the relative price of current cocoa prices to the lower cocoa prices seen down around the lows last year. In our mind, supply and demand functions remain relatively balanced but could be considered negatively biased. Uncertainly at the Ivory Coast was largely responsible for the market's ability to rise above the $1,400 level on the weekly chart. We suspect that cocoa has inherent value in excess of $1,200 but that the $1,400 level has been shown to be a critical pivot point for the last 11 years. Therefore, we would not suggest that nearby cocoa prices are completely deflated until the May contract has dropped below $1,436 and below the July contract value of $1,475. The Nybot reported cocoa warehouse stocks to have decreased by 11,617 bags to stand at 2.884 million bags.

FUNDAMENTAL FOCUS: Light fund selling on Monday might have been prompted by extremely negative macro economic sentiment, but since that sentiment leveled out into the cocoa close, we can understand the slight bounce off the lows. Traders should be watchful of any conflict involving the upcoming May 14th disarmament date. According to the most recent COT report, the technical condition of cocoa would not seem to be fully balanced and that also tends to leave us bearish to prices in the near term.

TODAY'S MARKET IDEAS:
None.

NEW RECOMMENDATIONS:
None.

PREVIOUS RECOMMENDATIONS:
Long July cocoa on a break down to $1,550, *Hit tight stop at $1,530.

TECHNICAL OUTLOOK:
Note: Technical commentary is based solely on statistical indicators and does not necessarily correspond to any fundamental analysis that may appear elsewhere in this report.

COCOA (JUL) 04/19/2005: The crossover up in the daily stochastics is a bullish signal. The stochastics indicators are rising from oversold levels, which is bullish and should support higher prices. The close under the 18-day moving average indicates the longer-term trend could be turning down. The daily closing price reversal up on the daily chart is somewhat positive. The close over the pivot swing is a somewhat positive setup. The near-term upside objective is at 1576. The next area of resistance is around 1558 and 1576, while 1st support hits today at 1520 and below there at 1499.



****** DAILY COFFEE COMMENTARY
04/19/05

CLOSE TO BOTTOMING AND SHOULD BEGIN ANOTHER LEG HIGHER SOON

Friday was the first technical sign of a near-term low in quite some time and the market revisited most of Friday's range yesterday. The basic fundamentals for the coffee market are already bullish for the coming season and further weather problems in Vietnam or Brazil would just add fuel to the bullish fire. Speculative long liquidation selling has been the primary bearish force of the recent past and when the selling slows, commercial buyers are likely to turn more active. July coffee remains above 112.75 support despite being pressured by rollover activity on Monday. While coffee supplies are forecasted to tighten in Brazil, the market is awaiting the government's next official crop estimate to be released Friday, and if it is higher than market expectations, July coffee could see another push down before a more solid bottom takes hold. However, with technical indicators at over sold levels, a lower crop estimate could spark renewed buying. The December forecast was 30.7-33.0 million bags, down 17% from last year. Trade houses estimate the Brazil crop between 34-39 million bags, but given the recent weather, Brazil is likely to come back with a steady to slightly smaller forecast. Exchange coffee warehouse stocks stood at 4.519 million bags as of April 15th, up 125 bags from the previous day with 64,688
bags pending review.

FUNDAMENTAL FOCUS: Dry weather is in the forecast for Brazil and with little or no rain this month in key producing areas; production for the 2006/2007 crop could be impacted. The rainy season in Vietnam is expected to be two weeks late which could add to the drought losses.

TODAY'S MARKET IDEAS:
July coffee buying support levels include 114.50 and 110.45 with resistance up at 123.80. A move over 117.85 might confirm a near-term low. Consider buying the August 120/140 bull call spread.

NEW RECOMMENDATIONS:
None.

PREVIOUS RECOMMENDATIONS:
None.

TECHNICAL OUTLOOK:
Note: Technical commentary is based solely on statistical indicators and does not necessarily correspond to any fundamental analysis that may appear elsewhere in this report.

COFFEE (JUL) 04/19/2005: Momentum studies are declining, but have fallen to oversold levels. The major trend has turned down with the cross over back below the 18-day moving average. The daily closing price reversal down is a negative indicator for prices. The close over the pivot swing is a somewhat positive setup. The next downside target is now at 111.55. The next area of resistance is around 116.90 and 118.60, while 1st support hits today at 113.40 and below there at 111.55.



****** DAILY COTTON COMMENTARY
04/19/05

BULLISH TECHNICAL ACTION; CALIFORNIA PLANTINGS ACTIVE; CHINA BUYING

The technical action remains bullish and traders expect a major merchant to take deliveries against the May futures. July cotton closed strong, but off session highs as front month May shot higher on aggressive buying by a major cotton merchant. Sentiment remains supportive for cotton despite expectation for large US supplies as these are expected to be offset by robust world demand helped by a weaker Dollar which will keep US cotton competitive on the world market. The COT report shows the market in an overbought condition and vulnerable to selling if support levels are violated. The trade, however, remains quite bullish on demand and uncertainty of world supply. A dry weather trend for California cotton producing areas helped producers catch up on planting progress which was behind normal due to a wet spring. As of April 15th, there was still over 26,000 contracts open for the May futures.

FUNDAMENTAL FOCUS: As of April 17th, 11% of the US crop was planted as compared with 15% last year and 15% as the 15-year average for this time of the year. The California crop was 30% complete vs 10% last week and 51% as the 5-year average.

TODAY'S MARKET IDEAS:
The fundamentals are questionable but the technical action remains bullish. December cotton support comes in at 55.55 and a close over 56.62 should be enough to project another push higher to 60.17 as next upside objective.

NEW RECOMMENDATIONS:
None.

PREVIOUS RECOMMENDATIONS:
None.

TECHNICAL OUTLOOK:
Note: Technical commentary is based solely on statistical indicators and does not necessarily correspond to any fundamental analysis that may appear elsewhere in this report.

MAY NOW HAVE THE MOMENTUM TO PUSH THROUGH 55.10

COTTON (JUL) 04/19/2005: Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The major trend has turned down with the cross over back below the 18-day moving average. The outside day up and close above the previous day's high is a positive signal. The market setup is supportive for early gains with the close over the 1st swing resistance. The next downside objective is 51.88. The next area of resistance is around 54.80 and 55.73, while 1st support hits today at 52.88 and below there at 51.88.



****** DAILY SUGAR COMMENTARY
04/19/05

PROBING FOR LOW; BUY BREAKS OR CONSIDER CALL SPREADS; BASEBUILDING

The sugar market is probing for a near-term low and with a clash of longer-term supply and demand news, traders are struggling to determine if prices are too cheap or if a recovery in production from key countries like India and Brazil
will be enough to push the world balance sheet into a surplus situation for the coming season. Lower production from Thailand and possibly China this year is an offset to the increases from the Far East. In addition, EU sugar production
is expected to fall in the years ahead as the subsidy situation is revised. In addition, Australia is still having drought difficulties. July sugar closed 8 points higher on the session after the early weakness failed to attract new selling interest. The oversold condition of the market and some light weather concerns for Brazil and to some extent China helped to provide underlying support. Traders are hopeful that China might import nearly 500,000 tonnes of sugar due to dry weather concerns and Russian buyers seem to be getting a little more active. The Brazil crop is still expected to be a record, but recent dryness has taken some of the higher production estimates down. The Commitment-of-Traders report with options showed the fund trader net long over 8,100 contracts, but futures only report has funds net short over 16,000 contracts.

FUNDAMENTAL FOCUS: New demand from India and Indonesia is expected to emerge due to the recent sharp break and Russian buying might pick up. Chinese production could be 1.6 million tonnes below consumption so the trade will monitor China
for imports as well.

TODAY'S MARKET IDEAS:
Key support for July sugar is down at 814 and for October sugar down at 818 and the market is likely to begin to show some stability near these prices. Consider buying breaks with 861 July and 873 October as resistance.

NEW RECOMMENDATIONS:
Sell 1 October sugar 850 call near 46 and buy 3 of the October 950 calls at 17 each.

PREVIOUS RECOMMENDATIONS:
None.

TECHNICAL OUTLOOK:
Note: Technical commentary is based solely on statistical indicators and does not necessarily correspond to any fundamental analysis that may appear elsewhere in this report.

STOCHASTIC DIVERGENCE SUGGEST A TEMP LOW IN PLACE

SUGAR (JUL) 04/19/2005: 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 close under the 18-day moving average indicates the longer-term trend could be turning down. Market positioning is positive with the close over the 1st swing resistance. The next upside target is 8.44. The next area of resistance is around 8.38 and 8.44, while 1st support hits today at 8.22 and below there at 8.11.


** OJ TECHNICAL OUTLOOK:
Note: Technical commentary is based solely on statistical indicators and does not necessarily correspond to any fundamental analysis that may appear elsewhere in this report.

OJ (MAY) 04/19/2005: The major trend has turned down with the cross over back below the 60-day moving average. Momentum studies are declining, but have fallen to oversold levels. The close under the 18-day moving average indicates the longer-term trend could be turning down. The market is in a bearish position with the close below the 2nd swing support number. The next downside target is 88.95. The next area of resistance is around 93.15 and 95.75, while 1st support hits today at 89.80 and below there at 88.95.

CONTACT ME: williamfrost@comcast.net or call 615 331 8567.
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Trading futures is for individuals willing to assume greater risk for the opportunity of greater rewards. Only speculative capital should be used. Past performance is no assurance of future profits. Information contained herein is believed reliable but original sources of data have not been independently verified therefore is not guaranteed. Ideas and suggestions are just that. Nothing herein should be construed to be a solicitation to trade futures or options. Hedgers should have a defined plan.