India, the world's largest sugar producer, may produce less next year than previously forecast

04.29.09

Filed 8:05 pm Wednesday     

                                                       Last                                            Last Week   

June Crude                                  50.59                                                48.65

June Heat                                     133.65                                             134.64

June XRB (Blended Gas)           143.50                                              138.99

Crude oil and gasoline both rose in price after the Department of Energy released its weekly supply and demand figures Tuesday morning. While crude oil showed a gain of 4.5 million barrels, it was the drawdown in gasoline stocks of 4.7 million barrels that sent the market higher. The drawdown in gasoline was the biggest reduction since September. The trade had been looking for gasoline stockpiles to have declined by 20,000 barrels. Another supportive feature to the session was the weakness in the dollar ahead of the Federal Open Market Committee meeting. Crude oil is up 14% on the year. Gasoline was higher by five cents on the session or 3.6 and is at its highest price since April 17. Refiners operated 82.7%, slightly lower by 0.8 percentage points from last week. A surge in crude oil stocks of 374.7 million barrels puts supplies at their highest levels since September 1990. Crude stocks are running 15% higher than the five year average. Traders had been looking for crude stocks to have increased by 1.8 million barrels. In another story regarding the terminal port of Rotterdam, it was reported that they are running out of room to store crude oil due to excess quantity and slow demand.  Crude oil stocks have risen 18 of the last 21 weeks. Total fuel demand in the United States averaged 18.4 million barrels, down 6.8% last year at this time. The oil complex was positively influenced by higher equities and the lower dollar. Also consumer confidence came in higher than expected, another market positive. The next regularly scheduled meeting OPEC is May 28. Money flow in crude oil remains positive.

 

                                                                Support                                     Resistance

June Crude                                            48.00                                                52.00  

June  Heat                                              129.50                                             139.00

June Gas                                                135.00                                              148.00

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METALS

                                                                     Last                                              Last Week     

June Gold                                               897.00                                                 892.50

July Silver                                                12.735                                              12.33                

July Platinum                                         1099.80                                    1178.70            

Despite the fact that the dollar had a very poor performance on Tuesday against other major counterparts, the gold turned in a very mixed performance. The Federal Reserve left interest rates unchanged at its meeting today as many had expected. The Federal Reserve went on to state that the economy remains fragile and that with excess capacity and slack demand, inflationary pressures are not a problem at this time. There was some selling after the markets closed and gold is currently down $3.90 on Wednesday evening. Another negative for gold was the rise in the price of equities over the past several weeks. Gold continues to look for a theme to trade against. Gold could trade down to 875 over the next several sessions looking for a base of support.

 

                                                             Support                                      Resistance

June Gold                                            872.00                                         915.00  

July Silver                                            11.95                                           13.18         

July Plat                                              1065.00                                        1189.00       

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SOFTS

                                                                       Last                                     Last Week

July Coffee                                              116.50                                                117.75

July Sugar                                                14.08                                                13.55

Coffee prices remained fairly strong. Declining coffee production in Colombia is helping to support prices. A weaker dollar on Wednesday was also a supportive feature. Columbia's expected production 10.5 million bags this year is 16% less than last year at this time.

 

 

Sugar was also steady as India, the world's largest sugar producer, may produce less next year than previously forecast. This may result in India importing sugar for the second year in a row. Last February, the world global deficit in sugar was estimated at 4.27 million tons by the International Sugar Organization. Brazil is not expected to be able to make up this deficit. Too many of their factories process sugar only for ethanol use.

 

                                                           Support                                   Resistance

July Coffee                                     113.00                                          118.00           

July Sugar                                       13.60                                           14.30                                          

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                                                                  Last                                    Last Week

 July Soybeans                                      10.25                                    10.46

July Corn                                               4.012                                   3.734

July Wheat                                             5.316                                   5.28

Corn and soybeans managed to maintain their current price levels as the market speculated that the recent swine flu outbreak will be less disruptive to demand for food and animal feed stocks than had been previously expected . Corn and soybeans both fell earlier in the week as the swine flu outbreak moved from Mexico to the United States and six other nations. Traders reason that the previous outbreaks of severe acute respiratory syndrome and avian flu proved not to be detrimental on a long-term basis to the world's economy. Wednesday's gains for soybeans and corn were the largest was March 31. A weaker dollar was also positive for grains and their export potential. Soybeans found  additional support after the forecast for Argentina's harvest came in at 34 million metric tons, a reduction from last week’s forecast of 36.2 million tons because of drought. Argentina is the third largest exporter in the world for soybeans. Brazil's crop of soybeans will total 57million tons down from 61 million as previously thought. The combination of the drop in South American production and increased demand from China is a positive for US soybeans.

 

 

Heavy rains in the Midwest has delayed planting of the corn crop and may eventually reduce yields. The weather models call for continued rain. Cool and wet weather forecast for central growing regions will limit the corn planting progress. About 22% of the corn crop is in the ground as of April 26. The market is keenly aware of the swine flu situation and is looking to see if it can be contained and not affect demand for the crop.

 

 

 

                                                               Support                                    Resistance

July Soybeans                                       9.70                                            10.60     

July Corn                                               3.80                                            4.50    

July Wheat                                            5.15                                             5.45    

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.