Futures metal prices mostly higher this week

 

Weekly Futures Report

07.01.09

Filed 6:48 pm Wednesday     

                                                       Last                                            Last Week   

Aug Crude                                    69.26                                             68.55

Aug Heat                                        176.55                                        178.87

Aug XRB (Blended Gas)              185.80                                        185.65

Crude oil fell sharply after a Department of Energy report indicated that stockpiles rose more than previously expected. The key component was gasoline. Gas supplies increased by 2.33 million barrels to 211.2 million barrels for the latest reporting week. The trade was looking for increase of 2 million barrels. Distillate stocks rose by 2.9 million barrels to 155 million barrels, the highest level since 1987. Going into the report, market was broadly higher and trading at levels that would be hard to sustain. Upon the release of the report, profit-taking set in and eventually shorts began to aggressively sell the market, looking for a sharp break. The increases in supplies for gasoline and heating oil suggested to some that demand for these products remains modest, at best. Crude oil was almost 3% higher on the day before the release of the report. Total demand for fuel over the past four weeks is down 5.8% from one year earlier. Many fundamental traders believe that prices are higher than the fundamentals of the market justify. Lower closes tomorrow would turn the intermediate technical trends negative. The International Energy Agency reduced their five year forecast for global crude demand because of the current, world wide economic slump. They predict that consumption will not regain 2008 levels until the year 2012.

 

 

                                                                Support                                     Resistance

Aug Crude                                             66.25                                                75.00 

Aug Heat                                               169.50                                             192.00

Aug Gas                                                181.00                                            202.00                                                               

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METALS

                                                                     Last                                              Last Week     

Aug Gold                                                 940.70                                                 932.50

July Silver                                                 13.76                                                13.86              

Oct Platinum                                           1208.50                                             1168.60

Metals were reluctantly higher the past five sessions, thanks chiefly to a weaker dollar against the major foreign currencies. US short-term interest rates were lower and that was a positive. The market will be especially responsive to Thursday's release of the US unemployment figures. The market will be closed on Friday in observance of the July 4 holiday. The market is expecting a decline of 498,000 jobs for the current month. The US economy continued to show some modest signs of improvement as the sales of existing homes were slightly higher in May, up for the fourth consecutive month. Also the ISM index rose to 44.8% last month up from 42.8% in May. A reading above 50 would suggest economic expansion. The market continues to be driven by the dollar and remains in a trading range.

 

 

                                                             Support                                      Resistance

Aug Gold                                             910.00                                            950.00

Sept Silver                                            13.05                                            14.45                  

Oct Plat                                               1151.00                                       1222.00

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SOFTS

                                                                       Last                                     Last Week

Sept Coffee                                                 119.05                                      119.25

Oct Sugar                                                     17.75                                       17.10

Coffee rallied thanks to the weaker dollar earlier in the week but fell back on book squaring ahead of the July 4 holiday. Prices are expected to solidify around the 1.20 level. The market has backed off its June highs when the contract traded 1.42 per pound, the highest level since last September. Harvest pressures in Brazil pushed the coffee market 13% off its 2009 highs.

 

 

Sugar came off a three-year high as equities declined and the dollar rallied against the major currencies in the Wednesday afternoon session. Sugar is still up around 51% for the year because of a lack of production in India, the world's biggest producer after Brazil. In Q2 sugar was up 41%, the most since the middle of 2000.

 

 

                                                          Support                                   Resistance

Sept Coffee                                                    117.20                                     122.00

Oct Sugar                                          17.00                                        18.50

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                                                                  Last                                    Last Week

Nov Soybeans                                        12.584                                            10.08

Sept Corn                                               3.564                                             3.95      

Sept Wheat                                             5.354                                          5.676

Corn was down the daily permissible limit of $.30 on Tuesday. Prices fell on the belief that US inventories, the world's biggest exporter, maybe higher than previously thought. Corn stockpiles in the United States are thought to be at 4.183 billion bushels, the most in three years and almost 4% higher than last year at this time.

 

 

Wheat prices were at their lowest levels in six months after the USDA report showed that the seeding of spring wheat was greater than estimated previously by traders. Inventories of all wheat varieties are almost most double from last year at this time. The market will have to deal with this overabundance of supply and the only way to do that is for prices to trade lower. Corn has been under selling pressure as the USDA says that growers will plant 8.7 million acres of corn compared to the previous estimate of 8.516 million acres.

 

Soybeans did rally sharply on Wednesday but the market is becoming overbought and as soon as the planting is complete look for short selling to emerge as well as hedge selling.

  

                                                          Support                                    Resistance

Nov Soybeans                                        9.25                                        10.50

Sept Corn                                                3.30                                          4.00

Sept Wheat                                              5.05                                         5.84

Chuck Kespert

HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM.

ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS.