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On balance, nearby futures have traded lower over the past five sessions
 Market News

WEEKLY FUTURES REPORT

7.25.12

 

 

 

Last

Last Week (7.18.12)

Sept Crude

89.00

90.26

Sept Heat

284.73

288.51

Sept Gas (Blended)

272.41

278.08

On balance, nearby futures have traded lower over the past five sessions. There was a bit of a short term counter trend rally that developed on Tuesday night as the idea was advanced to nominate the European Stability Mechanism (ESM) as a bank to more easily deal with the Eurozone’s sovereign debt crisis. On this, there was a modest rebound in the EC. Weak dollar sentiment as expressed by higher valuations for the Canadian, Aussie and Swiss helped to encourage a “risk on” mentality and lift oil higher into the US opening. At 10:30, the IEA released its weekly supply and demand figures and this resulted in aggressive selling. The Agency stated that gasoline stocks increased by 4.13 million barrels while distillate stocks rose by 1.71 million barrels and crude stocks increased by 2.72 million barrels. These numbers leave oil supply roughly at 22 year highs. Also, refinery runs increased to almost 93% of capacity. Many metrics suggest continuing economic contraction and Eurozone deflationary pressures continue to weigh on the market. An indication of weak demand is also seen in the glut of oil tankers available for hire in the Persian Gulf. Excess tanker capacity is approximately 20% greater than shipping demand. As for the charts, prices continue to trade above the mid Bollinger band while the fundamentals remain persistently weak.

 

 

Support

Resistance

Sept Crude

86.58

90.00

Sept Heat

277.50

287.50

 

Sept Gas

265.00

277.50

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METALS

 

 

 

Last

Last Week

Aug Gold

1603.50

1572.80

Sept Silver

27.285

27.125

Oct Platinum

1399.60

1406.10

Gold traded higher on Wednesday as an idea circulated that the European Stabilization Mechanism might be able to be recategorized as a bank. This gave a boost to the EC and with it a weaker dollar tone to the currency complex and higher prices for metals. Funds hold massive short positions in the EC so any impulse higher can create a spike and this can spill over into other commodities such as metals. There is also the belief that recent economic metrics consistently show economic contraction not only from the euro zone but also from China and the United States. Consequently, many traders believe that further quantitative easing is inevitable. Gold especially likes the idea of free money and consequently rallies whenever the possibility of QE3 seems more likely a reality. Wednesday’s New York Times featured an article that stated that the Federal Reserve is closer to a stimulus package than previously thought. As can be seen from the chart below, gold is up against a trend line. Platinum continues to act as a laggard in this complex.

 

 

Support

Resistance

Aug Gold

1560

1650

Sept Silver

26.50

28.50

July Plat

1363.00

1417.00

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SOFTS

 

Last

Last Week

Sept Coffee

176.30

182.15

Oct Sugar

23.57

22.95

Better weather models and Brazil and long liquidation pressures sparkedprofit-takingon Tuesday. Dry weather models suggest that producers will accelerate the harvest next week. Currently the harvest is only 42% complete. Hired margin requirements by the exchange exacerbated the selling pressure yesterday. Mostly dry weather over Brazil’s key growing areas was the key fundamental negative factor for the market. Growers continue to see better demand next year.

As for the charts, the break below the mid Bollinger band is a negative.

The same dry weather outlook for coffee also created some selling pressure for sugar. Continuing fears over euro zone weakness is a price negative. Dry weather over Brazil’s key growing areas should accelerate the harvest in and inspire faster exports. Sugar cane production should be 4% higher than previous estimates.

As far as the charts, upward price momentum is stalling.

 

Support

Resistance

Sept Coffee

175.00

182.00

Oct Sugar

22.50

23.75

********************** **********************

GRAINS

 

Last

Last Week

Nov Soybeans

16.154

16.20

Sept Corn

7.944

7.95

Sept Wheat

9.032

9.032

The big news in soybeans was that they briefly touch limit down levels Tuesday. The sharp break in prices on both Monday and Tuesday renewed buying interest from China. Current weather favors soybeans against corn

in terms of eventual yield. Current weather models are not in agreement as to precipitation levels over the next week. Topsoil conditions for nearly 60% of United States remained inadequate. The current yields projections that are down 38 to 39 bushels per acre could be in an eight year low. Total production would come in at 3 billion bushels.

Mid Bollinger band contained the selloff.

Upside momentum in corn is beginning to look questionable. The new crop continues to ping between 7.50 and 8.00 as exact conditions have yet to be completely defined. Weather patterns and models remain in conflict. Soil moisture levels in the Midwest corn belt have deteriorated every week over the past month. Projected yields continue to be lowered. Some current yields are projected at 10 year lows. Prices reached levels which resulted in demand destruction.

As for the charts, Monday’s lows continue to hold.

Funds hold record long positions in wheat even though the fundamentals aren’t as strong for wheat as they are for corn. The harvest is two weeks ahead of schedule. The recent drop in prices has made US wheat more competitive for export. Long liquidation pressures from overextended funds have been a factor. In early trading Wednesday night, wheat is 14 cents lower, soybeans 24 cents lower and corn 7 cents lower on dollar strength.

Look for a retest of 8.50 for wheat.

 

Support

Resistance

Nov Beans

15.07

16.50

Sept Corn

7.50

8.30

Sept Wheat

8.20

9.40

     
News