Weekly Futures Report

04.08.09

Filed 7:45 pm Wednesday     

 

                                                       Last                                            Last Week   

June Crude                                    52.54                                                50.20

June Heat                                     143.65                                              136.84

June XRB (Blended Gas)            146.76                                                138.67

On Tuesday night, the American Petroleum Institute stated that crude stocks rose by a more than expected 6.8 million barrels. This left ending stocks, according to their figures, at 15 year highs. Because of this, traders were positioned on the short side of the market going into the release of the Department of Energy report on Wednesday at 10:30. When the DOE surprised the market by stating that crude stocks had risen by only 1.65 million barrels, short positions were forced to cover. Still, with ending stocks at 361 million barrels, crude supply remains at its highest level since July of 1993. The market remains well supplied with crude oil. But the fact that the inventory buildup according to Department of Energy was nowhere close to that suggested by the API report influenced traders across the board. Crude oil now seems to be fairly well entrenched in a trading range. Markets will be closed for trading on Friday in observance of Good Friday. The global economic slowdown as reflected by such things as the Baltic Dry Index continues to suggest that demand for crude will be slack. At the same time, cold weather continues to remain in the Northeast United States. The spread between Brent crude oil and West Texas intermediate remains wide in favor of European oil. As far as the economy is concerned, the release of the Federal Reserve's Beige Book on Tuesday suggested that the US economy might be locked in a self reinforcing cycle of rising unemployment and slumping business and consumer spending. Money flow in crude remains positive.

 

 

                                                                 Support                                     Resistance

June Crude                                            49.50                                                 55.40  

June  Heat                                              137.70                                             150.00 

June Gas                                                142.00                                              154.00

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METALS

                                                                     Last                                              Last Week     

June Gold                                                   882.70                                              929.20

May Silver                                                   12.26                                               13.045                 

July Platinum                                            1177.70                                             1143.80            

The price of gold has continued to erode over the past five sessions as equity prices stabilized. Actually, stocks have just ended a four-week rally that has been the best since 1933. In this environment the demand for gold as a safe haven investment has diminished. At the same time the Federal Reserve still sees downside risks to the economy and many are just calling the recent rally in stocks a classic bear market rally. Whatever the case, the risk premium buying of gold has been temporarily removed. Hedge fund manager George Soros indicated recently that the equity market rally will be short-lived and the market will return its attention to the inherent risks in the economy. So far this year, gold is down 1.3%. International Monetary Fund is about to raise its estimates for US originated toxic debt to $3.1 trillion up from a projection in January of 2.2 trillion. Platinum is been very strong even with the well chronicled woes of the car industry. Platinum is up 22% for the year. Traders say that the rally in this metal is a bear market rally and once inventories are restocked selling pressure should develop.

 

 

                                                             Support                                      Resistance

June Gold                                            863.00                                         896.00  

May Silver                                            11.88                                           12.50         

July Plat                                               1150.00                                        1196.00       

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SOFTS

                                                                       Last                                     Last Week

May Coffee                                                118.15                                          114.40

May Sugar                                                  12.38                                             12.73

Coffee remains strong due too concern over reduced output from Columbia. This concern has sent prices to their best levels in more than seven years. Colombia is the world's third largest coffee producer. Coffee output in Colombia is expected to drop 16% this year.

 

 

Sugar came under selling pressure as recent forecasts concerning global demand indicated that production would exceed demand. The reason for the decline is India. Sugar output in India may fall as much as 45% this year. This deficit in India may supply a floor to prices, however.

 

                                                           Support                                   Resistance

May Coffee                                     115.00                                          119.50          

May Sugar                                       12.00                                            12.50                                          

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                                                                  Last                                    Last Week

 May Soybeans                                       10.08                                          9.52

May Corn                                                3.964                                        3.96

May Wheat                                             5.325                                       5.254

Wheat has been under selling pressure over last several sessions on the idea that warmer weather will limit damage to the US crop and key growing regions. It's been unseasonably cold in the Midwest, dropping below freezing the last two nights. Still, the crop looks like it has suffered minimal damage so far. The current weather pattern should favor the developing crop and pressure prices. Money flow in the week is negative.

 

 

Demand for corn, soybeans and wheat from livestock will result in smaller US inventories. Corn reserves should decline by half a percent from last month's 1.72 billion bushels. Export sales of corn should improve as a result of the decline in South American corn production. Corn prices climbed to the best level since January 11 in trading last week. Smaller than expected reserves counterbalance the concerns over slack demand from economic contraction. Money flow in corn is positive.

 

 

The USDA may reduce soybean supplies on hand because of rising exports after droughts in Brazil and export problems in Argentina. Soybean stockpiles were estimated at 1.3 billion bushels down 9.1% from 1.4 billion bushels last year at this time. The current soybean stockpiles are at their lowest levels since 2003. Due to  political problems in Argentina, soybean demand for US product is greater than the estimation by the USDA. Money flow in soybeans is positive.

 

 

 

                                                               Support                                    Resistance

May Soybeans                                       9.75                                            10.25     

May Corn                                               3.75                                            4.10    

May Wheat                                            5.20                                             5.70    

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.