Weekly Futures Report
Filed 6:48 pm Wednesday
Last Last Week
Aug Crude 69.26
Aug XRB (Blended Gas)
Crude oil fell sharply after a Department of Energy report indicated
that stockpiles rose more than previously expected. The key component was
gasoline. Gas supplies increased by 2.33 million barrels to 211.2 million
barrels for the latest reporting week. The trade was looking for increase
of 2 million barrels. Distillate stocks rose by 2.9 million barrels to 155
million barrels, the highest level since 1987. Going into the report,
market was broadly higher and trading at levels that would be hard to
sustain. Upon the release of the report, profit-taking set in and
eventually shorts began to aggressively sell the market, looking for a
sharp break. The increases in supplies for gasoline and heating oil
suggested to some that demand for these products remains modest, at best.
Crude oil was almost 3% higher on the day before the release of the
report. Total demand for fuel over the past four weeks is down 5.8% from
one year earlier. Many fundamental traders believe that prices are higher
than the fundamentals of the market justify. Lower closes tomorrow would
turn the intermediate technical trends negative. The International Energy
Agency reduced their five year forecast for global crude demand because of
the current, world wide economic slump. They predict that consumption will
not regain 2008 levels until the year 2012.
Last Last Week
Aug Gold 940.70
July Silver 13.76
Oct Platinum 1208.50
Metals were reluctantly higher the past five sessions, thanks
chiefly to a weaker dollar against the major foreign currencies. US
short-term interest rates were lower and that was a positive. The market
will be especially responsive to Thursday's release of the US unemployment
figures. The market will be closed on Friday in observance of the July 4
holiday. The market is expecting a decline of 498,000 jobs for the current
month. The US economy continued to show some modest signs of improvement
as the sales of existing homes were slightly higher in May, up for the
fourth consecutive month. Also the ISM index rose to 44.8% last month up
from 42.8% in May. A reading above 50 would suggest economic expansion.
The market continues to be driven by the dollar and remains in a trading
Last Last Week
Sept Coffee 119.05
Coffee rallied thanks to the weaker dollar earlier in the week but
fell back on book squaring ahead of the July 4 holiday. Prices are
expected to solidify around the 1.20 level. The market has backed off its
June highs when the contract traded 1.42 per pound, the highest level
since last September. Harvest pressures in Brazil pushed the coffee market
13% off its 2009 highs.
Sugar came off a three-year high as equities declined and the dollar
rallied against the major currencies in the Wednesday afternoon session.
Sugar is still up around 51% for the year because of a lack of production
in India, the world's biggest producer after Brazil. In Q2 sugar was up
41%, the most since the middle of 2000.
Last Last Week
Nov Soybeans 12.584
Sept Corn 3.564
Sept Wheat 5.354
Corn was down the daily permissible limit of $.30 on Tuesday. Prices
fell on the belief that US inventories, the world's biggest exporter,
maybe higher than previously thought. Corn stockpiles in the United States
are thought to be at 4.183 billion bushels, the most in three years and
almost 4% higher than last year at this time.
Wheat prices were at their lowest levels in six months after the
USDA report showed that the seeding of spring wheat was greater than
estimated previously by traders. Inventories of all wheat varieties are
almost most double from last year at this time. The market will have to
deal with this overabundance of supply and the only way to do that is for
prices to trade lower. Corn has been under selling pressure as the USDA
says that growers will plant 8.7 million acres of corn compared to the
previous estimate of 8.516 million acres.
Soybeans did rally sharply on Wednesday but the market is becoming
overbought and as soon as the planting is complete look for short selling
to emerge as well as hedge selling.
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