Coffee futures under pressure

 Weekly Futures Report

06.18.09

Filed 6.25 pm Wednesday     

                                                       Last                                            Last Week   

Aug Crude                                   71.56                                                  72.03

Aug Heat                                       189.33                                              183.26

Aug XRB (Blended Gas)              200.00                                             201.53

August crude was initially lower after the Department of Energy released its weekly report. Going into the report itself, the market was showing signs of being defensive and gave the impression that economic recovery had yet to take hold. Immediately after the report, crude still was negative as the market decided to focus on the increase in gasoline supplies going into driving season. Gasoline inventories climbed by 3.39 million barrels to 205 million barrels last week. This was the biggest increase since January, according to the Department of Energy. The increase was also six times greater than the median forecast by market observers. Then traders decided to view the report differently, instead focusing on the greater than expected drop down in crude supplies. Refinery runs increased due to increased gasoline production to 9.13 million barrels a day. Gasoline imports were also 25% higher to 1.09 million barrels a day the highest since last April. As the day progressed the dollar once again showed weakness against major foreign currencies and the 82% correlation between crude oil and foreign exchange expressed itself yet again. Going into the close crude oil is $.50 higher on the day with heating up of 3.67 cents while gasoline was lower by four cents to reflect the increase in stocks. Overall money flow in crude oil remains positive. The same can be said for heating oil and gasoline. If the dollar continues to show signs of weakness expect still higher values for crude oil with an eventual target of $80 a barrel.                                                         

 

                                                                Support                                     Resistance

Aug Crude                                             68.50                                                74.50 

Aug Heat                                               179.50                                             195.50

Aug Gas                                                197.00                                            212.00                                                               

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METALS

                                                                     Last                                              Last Week     

Aug Gold                                                    939.70                                              962.00

July Silver                                                   14.32                                               15.225              

July Platinum                                             1209.0                                          1273.20            

Gold basically spend time tracking the dollar over the past week. Typically, gold moves inversely to the dollar. Each individual currency however, at least the majors, are giving off different signals. The yen is trading at new recent highs basically on risk aversion. The EC is somewhat higher based on high levels of German consumer confidence. The British was generally lower due to unemployment reports showing an increase for three consecutive months. Meanwhile, the commodity currencies, the Canadian dollar and Aussie dollar showed weakness. So against this mixed bag, gold had to be satisfied with trading range. The Consumer Price Index came in less than expected and did not show signs of prospective inflation. Of course there remains a concern that the 12.8 trillion dollar stimulus provided by the Federal Reserve will eventually the express itself as inflation. Money flow in gold remains positive as it does in silver.

 

                                                             Support                                      Resistance

Aug Gold                                             921.00                                            946.50

July Silver                                            13.85                                          14.555                           

July Plat                                               1192.00                                       1248.00

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SOFTS

                                                                       Last                                     Last Week

July Coffee                                                  118.30                                        130.15

Oct Sugar                                                    15.95                                           16.42

Coffee continued to be under liquidation. The harvest in Vietnam, the second-largest producer in the world, received more than adequate rain and this increased production. The wet weather eased concern about stress to the crop. The increase in the Vietnamese crop should help to close the deficit in world production. Global production should drop 5.4% to 127 million bags while global demand should outstrip supply by 4.6 million bags. Timing means everything in comedy, love and wheat.

 

                                                           Support                                   Resistance

July Coffee                                         115.00                                      130.00           

Oct Sugar                                          15.48                                        16.30

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                                                                  Last                                    Last Week

Nov Soybeans                                         10.50                                           10.792

Sept Corn                                                 4.162                                            4.466      

Sept Wheat                                               5.946                                            6.244

Soybeans remained strong due to the generally weaker dollar. 87% of the crop is in the ground as of June 14. This lags the five year average of 92%.  66% of the crop is thought to be in good or excellent condition. Even while there’s talk of a drought in western Canada, wheat remains under pressure technically. The delay in planting for soybeans is thought to be a price positive. Wheat production may reach the highest levels in four years. Wheat has fallen about 9.7% in price this month as favorable weather conditions have improved prospects for the winter wheat crop. Rainfall in May and early June came in at just at the right time.

 

 

                                                          Support                                    Resistance

Nov Soybeans                                        10.10                                        10.55

Sept Corn                                                 4.05                                          4.28

Sept Wheat                                              5.81                                           6.18

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.