Weekly Futures Report

WEEKLY FUTURES REPORT

03.16.11

Filed 8:40 pm

Last Last Week 3.09

May Crude 99.22 105.61

May Heat 301.16 307.96

May Gas (Blended) 285.52 303.36

Crude oil was under selling pressure over the past five sessions as the

unfortunate events in Japan resulted in asset liquidation. Also, there’s

the belief that the economic contraction in the aftermath of this event

will result in deflationary pressures. Oil demand could be could be

substantially depressed. The Japanese nuclear crisis is overshadowing

the regime turmoil in North Africa and the Middle East. Crude futures

came under acute selling pressure Wednesday when the commissioner

of the European Energy Commission made a public statement that in

his opinion the Fukushima power plant is effectively “out of control.”

Earlier in the session, oil rallied by as much as 2/5% on renewed

violence in Bahrain. There was increasing concern that violence might

spread to Saudi Arabia, the world’s largest oil exporting nation. True or

not, the market had to accommodate the statements by the European

official and oil was subsequently discounted in price. Oil remains 20%

higher than last year at this time. The technical picture for oil remains

negative over the near term, however. The longer that crude oil builds

time under $100, the more this will encourage long liquidation in the

market. Japanese officials stated that pressure in the containment

chamber in reactor #2 fell substantially on Wednesday. It remains open

to speculation if the rods are still covered by water or exposed, however.

US Atomic Energy officials also expressed concern over the situation

after the market close Wednesday and the Yen surged 400 points higher

on the open, a massive move. This currency move was matched by the

Swiss France, another safe haven currency.

As for the Department of Energy report regarding weekly supply and

demand, US gasoline stocks fell by 4.17 million barrels to 225 million

barrels, their lowest levels in two months. Crude stocks rose by 1.75

million barrels to 350 million barrels to 350 million barrels. Of course,

the main psychological factor to the market remains the resolution to

the reactor crisis. Money flow in crude oil is negative as it is for

gasoline.

For crude oil’s technical future, draw a neckline connecting the two

recent lows, then measure to the high then invert that measurement

using that neckline as a high to get a projected low of 87.60.

Support Resistance

May Crude 94.40 104.50

May Heat 290.16 312.50

May Gas 266.90 303.20

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METALS

Last Last Week

April Gold 1401.50 1429.60

May Silver 34.26 36.04

Apr Platinum 1688.30 1802.00

Gold could have rallied over the past week as a store of value in a time

of crisis but it has declined in price. As large traders were unwinding

risk trades, gold was just another non interest rate bearing asset to be

sold to raise cash. Gold fell in price by 2.3% yesterday to reflect the

general slump in equities. Gold futures were higher on Wednesday as

the Nikkei had its biggest rally since November. Gold’s high was made

on March 7th at $1445.70. Copper has also been under selling pressure.

The Yen surged to a post war high prompted by speculation that

insurers and investors will repatriate funds. The surge in the Yen

prompted some to think that the Bank of Japan would intervene. The

dollar/yen move is now beginning to be disorderly, a condition that the

Bank of Japan would want to see before committing to intervention.

Gold’s response to this latest surge was to drop in price. Aussie dollar

fell to its lowest level since December 2nd. The Swiss Franc, a flight from

fear currency, surged to a new high as well. The unwind of carry trades

will keep the Yen well bid and put further downside pressure on gold.

Support Resistance

April Gold 1352.50 1420.90

May Silver 32.15 35.52

Apr Plat 1652.00 1745.00

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SOFTS

Last Last Week

May Coffee 265.35 294.85

May Sugar 25.85 30.42

Coffee fell in price as well after reaching new highs for the year late last

week. Arabica coffee in the cash market changed hands at a 14 year

high then promptly fell 12% in price. Robusta coffee was not as

inflamed and value in the current decline has sparked buying by

roasters. Robusta was up 62% last year, less than the 77% gain for

Arabica coffee. Arabica coffee is grown in Latin America while robusta

comes from Africa primarily. The selling in sugar was due to a broad

based commodity selloff to raise capital to meet margin calls from the

decline of other commodities.

Support Resistance

May Coffee 256.78 278.00

May Sugar 25.00 32.40

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Last Last Week

May Soybeans 12.87 13.49

May Corn 6.164 7.01

May Wheat 6.62 7.586

With speculative interest high and commercial interests positioning

themselves on the short side, a commodity collapse in grains was due.

The trigger for it all was the earthquake then tsunami and subsequent

nuclear power plant crisis in Japan. Trade professionals believe that

grain demand in Japan, the world’s largest importer of corn, will not

decline however. Even with the damage wrought by the strongest

earthquake in Japan’s history, rolling blackouts and the increasing

likelihood of radiation leaks demand will remain strong. The United

Nations food and agricultural division stated that they don’t see any

reason for demand to decline in the coming months. Viable land for

crop production in Japan is about equivalent to an area the size of the

state of Maryland in the United States. Even though Northern ports are

affected in Japan by this horrible crisis they are not a major factor and

shipments can and will be redirected to other ports. Global supplies of

corn will remain tight. The decline in the grains over the past several

sessions is the normal wringing out of speculative interest from the

market. Global corn inventories will drop for a third consecutive year.

Record world production will not be enough to satisfy increasing

demand from emerging countries. The inventory to demand ratio for

corn will probably be around 15%, the tightest differential since 1974.

Again, speculative interest needs to come out of this market before a

base can be established and a substantial rally can yet again unfold.

Support Resistance

May Soybeans 12.19 13.71

May Corn 6.00 6.57

May Wheat 6.215 7.46

Chuck Kespert from NY/NY

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.