HELPING FUTURES TRADERS SINCE 1997

WEEKLY FUTURES REPORT

 9.27.12

 Filed 8:45 pm

                                       Last                        Last Week (9.19.12)

Nov Crude                         92.23                               92.30

Nov Heat                         316.11                           304.24

Nov Gas (Blended)        290.90                           272.73

Oil rallied sharply on Wednesday partly due to the belied that China will act to stimulate its economy. Continuing tensions in the Mid-East and the continuing calls from Israel to the United States to proactively deal with Iran’s nuclear capability also acted as support. For the latest reporting week, the Department of Energy reported that crude stocks fell by a greater than expected 2.466 million barrels. Year on year, crude stocks are higher by 24 million barrels. There was also a sharp decline in imports at 7.595 million barrels a day compared to the previous week’s 9.84 million barrels. The Gasoline price was bolstered by reports of an explosion at a Canadian refinery. The Department of Energy also stated that there was a draw in stocks of 481,000 barrels. There is tightness in this market as Gas stocks are 19 million barrels below last year at this time. Gasoline demand is down 1% from year ago levels.  Gasoline stocks on the East Coast of the US are at their lowest levels in four years. Yesterday, heating oil stocks fell by 482,000 barrels and are 298 million barrels below last year’s levels.  Demand for heating oil is over 8% lower than what was seen last year. Money flow in Crude oil remains negative. Money flow in the products is positive. Passage of austerity measures in Spain was taken as a positive for the complex.  Saudi Arabia should continue to overproduce. Crude looks to have resistance at 95.

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METALS

                                              Last                                    Last Week

Dec Gold                            1797.70                                 1771.70

Dec Silver                            34.69                                       34.58

Jan Platinum                     1655.60                                 1644.40

Gold managed to wash out weak longs on Wednesday in thin trading conditions only to reverse and rally on Thursday in the wake of Chinese stimulus. Lower than expected durable goods orders led to a weaker dollar and that in turn was a positive for gold pricing. Higher equities also lent support along with a forceful move in gold. Spain’s adoption of austerity measures is a long term negative for gold as it speaks to economic contraction and deflationary pressures. The drop in durable goods orders was a negative. Short covering on Thursday was also a prominent feature to trading. Money flow in gold remains positive. Money flow in silver remains negative while money flow in platinum remains positive. The South African platinum industry continues to face headwinds. Workers just aren’t willing to renegotiate wages.  As far as the charts are concerned, platinum continues to look potentially explosive.

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SOFTS

                                   Last                             Last Week

Dec Coffee                 174.30                        174.50

Mar Sugar                 20.39                            19.69

Coffee has been trading in a way that reflects its asset class. The Brazilian crop is in its flowering stage and the progress of this stage remains questionable. At the same time, the Vietnamese harvest may be pushed back to November. This could create tightness in the immediate supply of coffee form Vietnam. Weather models call for dryness in key growing areas of Brazil over the next two weeks. At this stage, rain is needed more than a drying forecast. Money flow in coffee is positive.

Money flow in sugar is positive. The idea that import demand from China will be better than expected is a positive. If Chinese production levels are ramped up, this will negatively affect imports down the line. In spite of local surplus, the International Sugar Organization doesn’t expect a sharp drop in prices.

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GRAINS

Continuing signs of economic contraction in Europe pressured soybeans lower. Grain traders weren’t pleased to see austerity protests in Greece. German unemployment numbers edging higher were another negative.

Soybeans re over $2.00 lower since the highs at the beginning of the month. There are better than expected yields as the US harvest ogresses. Traders also believe that China will also release surplus from stockpiles to keep prices lower. Money flow in soybeans remains negative.

Money flow in corn remains negative. Traders were looking ahead to Friday’s grain report before increasing exposure. Funds have been increasing long liquidations on negative days. Traders are expecting ending stocks to be 20 million bushels lower than last year at this time. The market continues to make lower highs and lows. The bias remains negative.  The chart continues to show a rounded top and now is ready to work a downside channel going into the end of the year.

Wheat continues to be range bound. Money flow in what remains negative. Traders were hoping that if Spain was able to pass austerity measures in the face of public disapproval, the ECB would be in a better position to unleash bond buying and inject liquidity into the system. Demand for US wheat continues to be slow . Volume has contracted. The trade is looking for ending stocks to be higher than last year at this time. Export demand is slack.