Crude Oil Highest Supply Since 1990 Grains Rally on Chinese Demand
Weekly Futures Report
04.22.09
Filed 6:55 pm Wednesday
Last Last Week
June Crude 48.65
52.12
June Heat 134.64
143.45
June XRB (Blended Gas)
138.99 146.33
Crude oil and its products were lower on Wednesday due to the Department
of Energy report that stated that inventories rose 3.8 6 million barrels to
370.6 million barrels, the highest level since September of 1990. Earlier in
the day, crude rallied thanks largely to a rally in the stock market. The
economic contraction worldwide is still taking a toll on oil. Total daily fuel
demand averaged over the past four weeks was down 18.5 million barrels, down
6.5% from the year earlier. Gasoline stockpiles were up 802,000 barrels to
hundred and 17.3 million barrels. The trade had been looking for 700,000
barrel decline in stocks. Distillate stocks were up 2.6 million barrels to
142.3 million barrels. This was the biggest increase since January 9. The
trade was looking for a drop in stocks of 1 million barrels. Refineries
operated at 83.4% of capacity, up 3.1% from last week. The increase in
refinery runs can be explained by refineries coming back online after
maintenance had been completed. Money flow in crude is negative. Money flow in
Hilo is positive but negative for gasoline. Rallies should continue to be
sold.
Support Resistance
June Crude 46.00
51.00
June Heat
129.00
142.00
June Gas 134.00
148.00
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METALS
Last Last Week
June Gold 892.50
891.20
May Silver 12.305
12.74
July Platinum 1178.70
1221.00
Gold and silver saw some buying interest on Wednesday as the
International Monetary Fund stated that the global economy will continue to
contract this year. The IMF is calling for a 1.3% decline in the world
economies. Because of this, gold was bought as a safe haven. Gold had been
lower for four consecutive weeks. Gold continues turn find resistance above
$892.00 an ounce. The market continues to be torn between those who see
massive government infusion of liquidity into the markets causing rampant
inflation eventually and those who think the economy is going to just continue
to contract and deflationary pressures will take over. Deflation is marked by
continually lower interest rates, job contraction and price reductions to
stimulate sales. Money flow in gold remains positive. GM may close production
facilities for as many as 9 weeks this summer due to slack demand; this is a
platinum negative.
Support Resistance
June Gold
870.00
903.50
May
Silver 11.70
12.42
July
Plat 1140.00
1200.00
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SOFTS
Last Last Week
May Coffee 116.95
115.70
May Sugar 13.22
13.14
Coffee maintained its recent strength and shot higher on Wednesday due
to speculation that the strike by truck owners in Colombia will delay
shipments. Truckers are striking over high fuel costs. It's been estimated
that 80% of the 156,000 union members are taking part in the strike. There's
already a tightness in coffee supplies and the strike will only exacerbate
this situation. Coffee is higher by 5.1% this year. Currently, there are no
talks to settle this strike. Colombian exports fell to 6 3 million bags for
the first quarter and are 16% lower than a year earlier. Columbia will produce
10.5 million bags this year down 16% from last year. The high cost of
fertilizer has been a negative.
Support
Resistance
May Coffee 110.20
117.50
May Sugar 12.50
13.85
**********************************************
Last Last Week
May Soybeans 10.46
10.35
May Corn 3.734
3.844
May Wheat 5.166
5.152
Soybeans have been strong thanks chiefly to Chinese demand. Fundamental
traders believe the only way to reduce demand is for prices to continue to go
up. World inventories should fall to 45.8 million tons down from 49.9 million
tons. Export sales to China since last September have jumped 36%. The drought
in Brazil and Argentina has diminished supplies there. The USDA has estimated
that domestic stockpiles will drop to 165,000,000 bushels, down 20% from a
year earlier.
Wheat was a little bit better in terms of price based on freezing
weather in parts of the US in the Great Plains. 42% of the crop is in good
condition. Quality is a question. Still, the price is down 14% this year based
on increased global production and declining demand. Commodity funds are short
so short covering could lift prices eventually.
Corn was lower on the idea that farmers in the Midwest US will
accelerate plantings over the next week. About 5% of the crop is in the ground
as of April 19. The average over the previous five years was 14% at this time.
Money flow in corn is positive.
Support
Resistance
May Soybeans
10.00
10.60
May Corn
3.63
3.84
May Wheat
4.97 5.22
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.
