Commodities Commentary from James Mound at MoundReport.com

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The Weekend Commodities Review
By Head Analyst James Mound

June 4th, 2004

Energies
You have got to love oil politics. So the terrorists want
to blow up Saudi Arabia so they don’t raise oil production. We get a $2
plus up day on Tuesday on the bombing news, and then a $2 plus down
Wednesday on the realization that the Saudis want to put out more oil, then
a down Thursday from OPEC confirmation. OPEC raises output less than
expected, the market argues they are already cheating and at maximum
capacity, and yet the market freefalls. You have got to love oil politics.
This is a short across the board (until something else gets blown up:).

Financials
Stocks ran ri! ght up to trend line resistance and end the
week with bull momentum off of a solid jobs report and upward revisions of
previous job reports. I still see this as a great entry to a short play.
Bonds came down a bit as the market realizes the need for a rate hike in the
June meeting. Greenspan needed some strong employment confirmation to make
the early move, and it is hard to argue that he has an wiggle room after
today’s report. Greenspan and the Fed are now in a catch 22. A ¼ point
says more to come and we aren’t sure about what we are doing, and a ½ point
is probably the right move but will scare the heck out of the market. The
dollar weakness failed to follow through this week, as the market congests
for another breakout. I expect a fake up move Monday and some strong
selling pressure by mid-week. The Canadian continues to be a buy, and the
yen a sell. I see some Japanese influence on their currency coming back
into play la! tely.

Grains
Grains got a limit up move on Tuesday off of wet weather
and tornado concerns over the weekend. With few participants really able to
gauge the true damage over the weekend, the market lacked any follow through
on the limit move. Wednesday’s failure shows just how weak the grain market
is. Today’s bounce is playing on oversold issues and pre-weekend short
covering. This is a short across the board, but beans in particular.

Meats
Meat and pork are just as resilient as I have ever seen
them. A lack of real selling interest has left the market in a buyers only
bull run. I recommend developing put positions to play the reversal,
because it will be hard and fast when it comes.

Metals
Gold failed to break through $400 and the dollar helped
to offer choppiness to the market. Gold continues to make large moves on
what the market perceives to be trend changing shifts in the dollar, and
thus this week’s action sho! uld be seen as an adjustment to an excessive
buying spree on last week’s dollar breakdown. The market is a good buy at
this point, but a break in the dollar below 8840 would be a nice lead
indicator. Silver will ride the coattails of gold, but the short squeeze is
history so $8 silver is long ways away. Copper failed this week and is
shaking out the bull bandwagon. The market is a bit confusing technically
speaking, and thus I recommend a stand aside until a clearer picture
develops.

Softs
A very nice congestive flag pattern developed this week
in coffee, as the market awaits some fundamental confirmation before
breaking to new highs. I would not be surprised to see a trading range
develop for a little while, between 78-86 on July. Cocoa had a big spike
down and is a buy at this price, despite the poor technical outlook. Sugar
broke to a new high, but failed to have real follow through. I would exi! t
longs and reenter on a break through 740. OJ got a nice bull bou nce today,
but until I see prices near 65 I would avoid this market like the plague.
Cotton is a sell, but another market to avoid. Lumber is a sell.

Disclaimer:
There is risk of loss in all commodities trading. Please
consult a James Mound Trading Group Broker before you trade for the first
time. Losses can exceed your account size and/or margin requirements.
Commodities trading can be extremely risky and is not for everyone. Some
option strategies have unlimited risk. Educate yourself on the risks and
rewards of such investing prior to trading. James Mound Trading Group, or
anyone associated with JMTG or moundreport.com, do not guarantee profits or
pre-determined loss points, and are not held monetarily responsible for the
trading losses of others (clients or otherwise). Past results are by no
means indicative of potential future returns.

Metals and Softs/Tropicals

3-Jun-04
Last
Day's
Change

Aluminum Aly, $/mt (lme) 1582.5000 30.0000
Copper, Grd A, $/mt (lme) 2877.0000 13.0000
Lead, Std, $/mt (lme) 924.5000 37.2500
Nickel, $/mt (lme) 12575.0000 -60.0000
Tin, $/mt (lme) 9932.5000 -142.5000
Zinc, SHG, $/mt (lme) 1107.0000 8.2500
Cotton 1st Exp (¢/lb)-NYFE 0.5704 -0.0034
OJ (comex) 1st Exp (¢/lb) 0.5465 -0.0060

© theFinancials.com

Energy Commodities

3-Jun-04
Last
Day's
Change

Brent Crude $/b-nymex 30.1500 0.3000
Crude Oil $/bbl-IPE 36.4000 -0.4600
Crude Oil A$/bbl-IPE 52.7500 -0.2500
Crude Oil C$/bbl-IPE 49.5800 -0.6300
Crude, E-Mini $/b-nymex 39.2800 -3.0500
Crude-LS $/b-nymex 39.2800 -0.6800
Elec, PJM $/Mwh-NYMEX 71.1800 -3.8000
Gas Oil $/MT-IPE 314.2500 -14.0000
Heating Oil-$/gal NYMEX 0.9953 -0.0162
Propane $/gal-NYMEX 0.6750 -0.0150
Unleaded $/g-nymex 1.2354 -0.0469

sources: DTN Market Access, theFinancials.com

© theFinancials.com

Major Indices

3-Jun-04
Last
Day's
Change

CAC 40 3654.37 8.14
DAX 3867.50 39.43
DJIA 10195.91 -67.06
NASDAQ 1960.26 -28.72
Nikkei 11027.05 -272.71
S&P 500 1116.64 -8.35

delayed 20+ minutes
sources: DTN Market Access, theFinancials.com

© theFinancials.com

James Mound, owner and head analyst for JMTG Brokerage & Analytics, currently writes the Weekend Commodities Review. For more information on Mr. Mound, JMTG Brokerage or the Mound Report, please visit www.moundreport.com or call 1-888-744-8866.