04.28 Filed Wednesday 6:15 pm
ALL CHARTS THIS WEEK ARE Daily Bars
Last Last Week
June Crude 83.22 86.68
June Heat 225.42 222.97
June Gas (Blended) 233.30 229.59
Oil prices turned higher after the release of the Federal
Reserve’s Open
Market Committee announcement leaving short-term rates
unchanged.
The market basically fell apart on Tuesday after Greek debt was
downgraded to junk. Spanish and Portuguese debt has also been
subsequently downgraded. The fear of a crisis in the Eurozone
could
result in a general economic slowdown. An economic contraction
would
of course lead to less consumption of oil. As far as the most
recent
supply and demand figures, the Energy Information Administration
stated that US crude stockpiles were higher by 1.9 million
barrels.
Distillate stocks rose by 2.9 million barrels and gasoline
stocks fell by
1.2 million barrels. Market watchers had expected an increase of
1.4
million barrels for crude and increase of 1.2 million barrels
for distillate
while they also expected an increase of 500,000 barrels for
gasoline. The
drawdown in gasoline was a positive. With the Federal Reserve
keeping
interest rates close to zero the market did have a relief rally
on
Wednesday but money flow remains negative for both crude oil
gasoline
and heating oil.
Support Resistance
June Crude 80.30 85.30
June Heat 218.00 230.00
June Gas 228.40 235.00
***********************
METALS
Last Last Week
June Gold 1171.80 1148.80
July Silver 18.135 18.109
July Platinum 1713.6 1740.30
Gold had a singularly spectacular performance over the last five
sessions as it was held out as an alternative to currency
exposure. Gold
priced in EC, British Pound sterling and Swiss franc made new
recent
highs. Gold is seen as a hedge against potential sovereign debt
default.
This week Greek debt was downgraded to junk. Spain and Portugal
also
had debt downgrades and there was a general flight to quality.
The EC
is down 8.3% for the year. There’s a possibility that the EC
will have to
monetize its debt thereby increasing the money stock and
increasing
inflationary pressures. At the same time, economic contraction
in the
zone could induce deflationary pressures. Gold was up 24% last
year as
the dollar fell 4.2% against major foreign currencies. It wasn't
that long
ago that the EC was being looked upon as being able to supplant
the
dollar as a reserve currency. This doesn’t seem likely any time
soon.
There is also an idea that the dollar may continue to rally
against major
foreign currencies if the US economy continues to improve or if
the Fed
moves short term rates higher. Money flow for gold remains
positive.
Money flow for silver however is negative as it is for copper.
As long as
there are concerns about sovereign debt, gold will continue to
be bought
on breaks.
Support Resistance
June Gold 1135.00 1187.50
July Silver 17.55 18.50
July Plat 1680.00 1775.00
*********************************
SOFTS
Last Last Week
July Coffee 133.90 131.25
July Sugar 14.86 16.69
Coffee surged to a two-week high as the dollar was weaker
against
major foreign currencies. Coffee had been down 3.8% for the year
as
the dollar was stronger. Also, production from Brazil was
forecast to
increase. Technically coffee may rally to 1.42 over the next 10
sessions
after clearing the $1.34 barrier.
Sugar continued to fall in price as supplies from Brazil
continue to rise
and eat into a global production deficit. Output in Brazil's key
growing
region increased by 77% compared to last year at this time.
Sugar more
than doubled in price last year as there was a drought in India
and
excess rains in Brazil. The exact reverse of this is happening
this year.
Prices are now at their lowest levels since last June.
Support Resistance
July Coffee 130.00 135.50
July Sugar 14.00 16.00
*****************************************
Last Last Week
July Soybeans 9.934 10.06
July Corn 3.64 3.690
July Wheat 4.88 4.996
July soybeans fell sharply yesterday on the idea that China will
try to
curb inflation by attempting to slow economic growth. If they
are
successful, this would reduce the demand livestock feed.
Yesterday,
Chinese equities fell to a six-month low as the government
attempts to
curtail the real estate market there. China is the biggest
foreign
consumer of US soybeans and it is believed that the US, Brazil
and
Argentina will all have record crops. Another reason for
Tuesday’s
decline was due to a USDA report which showed that soybean
planting
in key areas was ahead of a five-year average. Early planting
means
that soybeans will be harvested in August and that inventories
may
reach 190 million bushels up from 138 million bushels last year.
Corn rallied on Wednesday for the first time in four trading
sessions
after it had fallen its to lowest level in three weeks. There is
speculation
that China may increase corn imports. Also, cold weather in key
growing areas in the Midwest may damage crops. Weather in the
early
part of this week may slow down planting as well. Additionally,
snow
and cold weather in northeast China will probably delay planting
there
as well.
Wheat e continues to be weak in price. 69% of the winter crop is
rated
good or excellent. Last year at this time, only 45% of the crop
was rated
good to excellent. Traders say that the European debt crisis is
giving
some players the idea that demand will not be as great as it
could be this
coming year if economic contraction actually occurs in the euro
zone.
Money flow in wheat is negative.
Support Resistance
July Soybeans 9.80 10.19
July Corn 3.46 3.80
July Wheat 4.750 5.10
