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Greek Parliament passes austerity measures to pave the way for the reception for the first tranche of aid from the IMF

WEEKLY FUTURES REPORT

06.29.11

Filed 9:35 pm

Last Last Week

Aug Crude 95.03 95.41

Aug Heat 293.16 297.09

Aug Gas (Blended) 293.90 292.88

Crude oil rallied on a percentage basis by the most in six weeks on the anticipation and eventually the reality that the Greek Parliament would pass austerity measures to pave the way for the reception for the first tranche of aid from the IMF. The vote had a world wide audience and drew attention especially from the fact that there was continuous, fairly widespread rioting in front of the parliament building as the vote was taking place. The oil market also rallied due to technical factors and a greater than expected drawdown in stockpiles, according to the latest report of weekly inventories released by the Department of Energy. There was also the expectation of greater gasoline consumption during the July 4th holiday weekend. Also, oil gained strength after the national hurricane Center produced a weather model which indicated that a storm system near the Gulf of Mexico may become a tropical depression. The oil move was correlated to a stronger stock market which was trading higher going into month end as well as being correlated to short covering in the euro currency. On Tuesday evening the American Petroleum Institute stated that crude stockpiles were lower by 2.7 million barrels to 360.3 million barrels. Demand for gasoline has improved over the past week due to a fall in price. Gasoline retailing at the pump fell by 1.4 cents last week. It was also 11% below its high point on May 4. Oil prices were also supported after the Department of Energy report showed that crude stocks fell by three times as much as previously forecast. For the latest reporting week crude stocks declined by 4.38 million barrels while the trade had looked for decline of only 1.5 million barrels. Oil has virtually recovered its

entire 4.6% price decline it suffered after the International Energy Agency announced that it was tapping the Strategic Petroleum Reserve for 60 million barrels including 30 million barrels from the United States to moderate prices. The report was termed very bullish for crude oil. The spread between Brent crude oil and West Texas intermediate oil widened $7.37. The highest spread was $22.29 before the IEA announced the tapping of the SPR. US crude stocks dropped to 359.5 million barrels, the fourth week of declines. Imports also fell by 3% to 8.8 million barrels a day. It’s the first drop in imports in three weeks. On the weather front, tropical storm Arlene was taking shape in the southwestern Gulf of Mexico. It’s too early to tell exactly how this storm may adversely impact oil production and distribution however. Expect more speculative buying and short covering going into the three-day holiday weekend.

Support Resistance

Aug Crude 91.00 97.50

Aug Heat 278.00 300.00

Aug Gas 276.00 300.00

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METALS

Last Last Week

Aug Gold 1511.60 1553.40

Sept Silver 34.88 36.75

July Platinum 1726.40 1752.40

Gold rallied on Wednesday, lifted by the tensions surrounding the Greek austerity vote while at the same time reflecting a generally weaker dollar and higher prices for both crude oil and equities. Going into the session the financial markets were remarkably confident or complacent that the Greek austerity vote would pass and that the markets would move on to other issues ahead of the three-day holiday weekend. The one moment when a notable Greek parliamentarian voted against the austerity measure the euro currency fell by over 50 points in a flash crash only to be brought back to previous levels as it appeared that the vote was proceeding according to plan. Gold also found buyers as risk insurance against civil unrest in Greece. Gold had been down 2% this month to reflect lower prices for crude oil. The Greek austerity plan was approved. A second vote regarding its implementation still must be passed. The austerity measure calls for €78 billion to be cut from spending as well as the sale of key assets. Crowds of up to 20,000 people were protesting in front of the Parliament building. Also there was a 48 hour general strike in Greece which also inspired buyers of metals. Although money flow in gold remains negative, it’s difficult to envision much selling pressure coming into the metals complex in front of a three-day holiday weekend. More likely, it appears that 1502 to 1506 will find levels of buyers while resistance will manifest at 1525 to 1538. Money flow in silver also remains negative yet again it’s more probable that the euro currency will make a run at 145 simply because it’s an obvious technical level and this should be supportive to the metals complex. As you can see from the charts below the slope of the Bollinger bands is not particularly bullish, only that the lower band has been tagged and prices are now working their way back to a median level.

Support Resistance

Aug Gold 1494.80 1525.00

Sept Silver 33.39 36.00

July Plat 1678.00 1750.00

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SOFTS

Last Last Week

Sept Coffee 260.70 246.20

Oct Sugar 26.92 26.00

The coffee market recovered nicely from its recent sell off due to a shift in South America weather. September coffee made a new recent high

closing above the past three highs and finished off the session with sizable gains on Tuesday. Reports of weather conditions in key growing areas in Brazil were the main supportive feature for the games. The weaker dollar was also a supportive feature for all commodities as an asset class. Until there is greater clarity regarding the weather in Brazil, prices will find support on weakness.

Sugar market continues to see strength. Technicals look good. There is a fear that the Brazilian harvest will be hampered by a slow start and that should put upward pressure on prices. Traders continue to see a world surplus as putting a lid on prices but the market continues to work against that obstacle fairly well as nearby supplies remain tight. There’s less concern about supply in deferred months. Strength in the energy sector was also a supportive feature. Because of a late start to the Brazilian harvest season, one key area is reporting that production is lower by 14% compared to the same time last year and cumulative production is down 25% from this time last year; but again this is due to the delayed start to the harvest.

Support Resistance

Sept Coffee 245.00 262.00

Oct Sugar 26.00 28.50

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Last Last Week

Sept Soybeans 13.234 13.29

Sept Corn 6.780 7.022

Sept Wheat 6.742 6.732

Soybeans rallied on Wednesday thanks to a weaker dollar and generally better tone to the complex. Influences from outside markets were positive. There is a crop report due tomorrow morning. A key growing state for the soybean complex is North Dakota and weather there has been sufficiently difficult to prevent 6.3 million acres from being planted. Traders will be looking to the report on Thursday to see if this acreage has now been planted. As of June 5 only 68% of the US soybean

crop had been planted compared with the ten-year average of 82%. This is a price positive. Money flow in soybeans remains negative, however. Again the chart below isn’t particularly positive. There is an obvious double bottom in terms of price levels being tested but the slope of the market remains negative and prices are basically migrating back to a median level.

The combination of the state report for North Dakota which showed the possible loss of 6,000,000 acres for that particular state of short covering ahead of the USDA report Thursday morning and positive influences from ancillary markets all helps support prices. Commodity funds were aggressive buyers. Dollar weakness was also positive. The market had been oversold, another positive feature. The amount of rain the crop has received as suggested to some that vital nutrients may have been washed out of the corn. Corn could change its intermediate short-term trend for higher close on Thursday. Stochastics are crossing from oversold levels, a positive.

Wheat could change its intermediate short-term trend with a higher close on Thursday. Stochastics are again crossing and rising from oversold levels which is a positive. The slope for the market remains negative. Prices should be contained by the median band of the Bollinger. Some traders believe the price of wheat is too cheap relative to corn and this encouraged buying. There are also crop concerns for Russia and Canada and this was supportive as well. Some traders believe that September wheat has put in a near-term bottom.

Support Resistance

Sept Soybeans 13.00 13.56

Sept Corn 6.50 7.25

Sept Wheat 6.50 7.00

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.