US CONSUMER CONFIDENCE FALLS TO ITS LOWEST LEVEL IN 5 MONTHS

7.28.10 Filed Wednesday 7:30 pm

ALL CHARTS THIS WEEK ARE Daily Bars

Last Last Week

September Crude 76.90 76.46

September Heat 202.60 201.78

September Gas (Blended) 206.47 206.49

Crude oil fell to a one-week low after a report from the Department of

Energy showed that there was an unexpected increase in supply while at

the same time imports jumped to their highest levels in four years.

Crude stocks were higher by 7.3 million barrels to 360.8 million barrels

for the latest reporting week. This is the biggest increase since last

March. Money flow in crude oil is negative. Prices also suffered from a

drop in consumer confidence and durable goods orders which came in

less than expected. Prices are down 3% from their most recent high of

$79.30 on July 22. Imports were up 1.18 million barrels to 11.2 million

barrels. US consumer confidence fell to its lowest level in five months

and with that came the idea that demand would be soft. Money flow in

heating oil is negative. Money flow in gasoline is also negative.

Support Resistance

September Crude 75.00 80.00

September Heat 197.00 208.00

September Gas 200.50 210.00

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METALS

Last Last Week

December Gold 1163.60 1195.60

Sept Silver 17.515 17.803

Oct Platinum 1541.70 1529.80

Gold fell to its lowest level in three weeks on Tuesday as a decline in

consumer confidence helped spur selling. Technical levels were also

broken on the charts and this only intensified the selling pressure as did

margin selling. The general continuation of a worldwide equity rally has

reduced buying interest in gold lately. Also, the fact that the stress tests

for European banks turned into a nonevent was also a contributor to

selling pressure in gold. It is interesting to note that even as gold lost

value on Tuesday, copper managed to maintain its value. Technically,

gold has done some serious chart damage. Rallies will be met with

selling interest. At least jewelers in India see lower prices being

beneficial to demand. Money flow in gold is negative. Money flow in

silver could turn negative with a lower close on Thursday. Money flow

in platinum is positive. Money flow in copper remains positive as well.

Volume remains light due to summer trading conditions. As mentioned

in the last report, a fact well worth noting is that even as gold made new

life of life highs in June, volume in London was down nearly 18%.

Support Resistance

December Gold 1141.00 1200.00

Sept Silver 17.15 18.00

Oct Plat 1513.00 1577.00

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SOFTS

Last Last Week

September Coffee 167.40 157.30

October Sugar 18.87 17.47

Sugar rallied again on Wednesday on the idea that rising demand in

Asia will continue to supply strength to the buy side of the market. At

the same time, Brazil’s Minister of Agriculture stated recently that

sugar prices should fall over the next two years. As far as other

considerations, forecasted rains for Brazil next week are expected to

delay sugar loading in key ports. There are a record 115 vessels waiting

to take on 3.53 million metric tons of product. With each passing day,

the sense of tightness in the market intensifies.

Coffee is expected to remain at near five-year highs as demand

continues to outpace supply. Even with a bumper Brazilian crop,

market demand continues to be inelastic. It's always good to keep in

mind that the difference between good coffee and bad coffee is

considerable and the amount of good coffee around to satisfy high-end

buyers remains tight.

Support Resistance

September Coffee 162.00 171.00

October Sugar 17.50 19.50

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Last Last Week

November Soybeans 9.78 9.784

December Corn 3.906 3.934

December Wheat 6.47 6.186

Grains continue to be supported by a severe drought that has reduced

crop yields in Russia, the Ukraine and other key European growing

areas. China continues to import record levels of US corn, the most

since 1990. There has been some question about the quality of the corn

by the Chinese due to heat damage but recently the last four cargoes

have been accepted. Corn is up 7% since the end of April.

Wheat traded to a 13 month high basically due to the crop damage seen

in Russia and other key growing regions in Europe. Record high

temperatures in Russia may cut production by 25%. Buyers are

scrambling for coverage. There is the sense that global supplies are

shrinking. At a comparative cost basis, US grains seem very reasonable.

Money flow for wheat and soybeans is positive but it remains negative

for corn.

It's good to remember that soybeans for the November contract are

actually trading $.10 below levels seen on July 15. Corn is trading at

$.15 below prices seen on July 15. Wheat is trading $.20 higher than

prices seen on July 15.

Support Resistance

Nov Soybeans 9.25 10.75

Dec Corn 3.74 4.25

Dec Wheat 6.15 6.75

Chuck Kespert from NY/NY