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Platinum continues to be the strongest of the three charts.

Market News

WEEKLY FUTURES REPORT

10.03.12

Filed 2:48 AM 10.04

 

                                     Last                        Last Week (9.27.12)

Nov Crude                    88.14                              92.23

Nov Heat                      3.0664                          316.11

Nov Gas (Blended)      2.7995                          290.90

 

Oil fell sharply during Wednesday’s NY session as the US energy department stated that crude production is at its highest level in 15 years and at the same time consumption is contracting. Additionally, Iran’s currency was experiencing a substantial devaluation as the oil embargo imposed by the West continues. Oil was lower by 4.3%. Heating Oil was lower by 1.89% and Gasoline was lower by 2.65% by 4:30 NY time. Crude output rose by 11,000 barrels a day to 6.52 million barrels. This production level hasn’t been seen since 1996.

Simultaneously, total fuel demand fell to 16.3 million barrels a day. Crude oil is down 11% for the year.  For the latest reporting week, crude stocks fell by 482,000 barrels to 364.7 million barrels. Stockpiles are higher by 8.4% compared to last year at this time. Imports increased by 511,000 barrels to 8.11 million barrels. Gasoline inventories were higher by 114,000 barrels to 195.9 million barrels. Distillate stocks fell by 3.67 million barrels to 124.1 million barrels. Gasoline demand fell by 1.5% to 8.68 million barrels a day. Even as prices pushed higher at the pump, gasoline settled at its lowest level since July 25th in futures trading. More signs of Chinese economic contraction were a negative. Also, the Iranian currency crisis and reports of civil unrest because of this economic upheaval suggests to some that a regime change may be possible. The Chinese servicing purchasing manager’s index contracted to 53.7 from 56.3 in August. The fact that the market declined on Wednesday even as the trade had been looking for a build in stocks of 1.5 million barrels and the actual release showed a decline of 482K only underscored the weakness in the market. Money flows in crude and heating oil are negative while money flow could turn negative with a lower close on Thursday.

  

Support                         Resistance

Nov Crude

87.00

93.00

 

Nov Heat

 

302.50

 

313.50

 

Nov Gas

 

280.00

 

291.00

 

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

 

METALS

Last                                    Last Week

Dec Gold                            1781.0                                  1797.70

Dec Silver                            34.68                                       34.69

Jan Platinum                     1691.50                                 1655.60

 

Platinum continues to be the strongest of the three charts. Chinese markets were closed for holiday. The fact that gold held a decent bid even as oil cratered in price was a positive. European investors, nervous over Spain’s reluctance to accept a bailout, were on the buy side of gold. Better than expect Euro zone retail sales, were a positive. Better than expected ADP private jobs forecast numbers was another positive. The continuation of a zero interest rate policy by the Federal Reserve remains an entrenched positive. Upisde momentum seems to slowing with declining volume and open interest. Of course, the market is looking ahead to the US employment figures due out on Friday. A very strong number would be bullish for the metals and at the same time, a very weak number would also be positive as it would give rise to the idea of more Fed stimulus.  A number that hits consensus would be a negative.

 Support                               Resistance

Dec Gold

1765

1795

 

Dec Silver

 

34.00

 

35.50

 

Jan  Plat

 

1665

 

1715

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

 SOFTS

Last                             Last Week

Dec Coffee                 181.05                          174.30

Mar Sugar                21.58                              20.39

The market reversed its intermediate trend. A lack of producer selling was a positive. Bank loans to producers may allow Brazilian farmers to keep as much as 10% of the crop off the market. December coffee is trading at its best levels since July.  If weather models continue to call for hot and dry weather, the market might build in a weather premium. As prices rose, open interest declined which suggests short covering.

The technical action in sugar remains positive. Reduced exports from Thailand and more imports into Indonesia combined with hot dry weather in Brazil to drive prices higher. A less intense monsoon season in India may reduce output there. Fresh buying beyond just short covering has been able to lift prices convincingly.

 

Support

Resistance

 

Dec Coffee

 

173

 

188

 

Mar  Sugar

 

20.30

 

22.00

 

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

GRAINS

 

Last

Last Week

 

Nov Soybeans

 

15.316

 

15.706

 

Dec Corn

 

7.566

 

7.162

 

Dec Wheat

 

8.73

 

8.554

 

With the continuation of harvest pressures, soybeans are now a full $2.60 off of their summer highs. On the latest drop, volume spiked and open interest contracted which suggests more  long liquidation. Funds continue to be on the long side of the market. Private forecasters are increasing their projection for average acreage yield, a price negative. Cash market activity is slow given the recent fall in prices. China is in a holiday period so export activity has been light. Open interest remains historically high, a price negative. Lack of outside market news makes it difficult for soybeans to break out of technical levels.

Average corn yield projected by major trade houses has been recently upwardly revised. Traders are looking for consolidation ahead of next Thursday’s USDA report. Short covering looks to be the predominate activity. Money flow remains negative. With prices below the mid Bollinger band, ranges should still be expanded to the downside. Range trading has been in play since August.

Money flow in wheat continues to be negative. Volume continues to deteriorate. Corn/wheat spreads continue to narrow. Cash market is slow. Tenders are quickly offered for by several different origins. Ukraine, Russia and Australia are all eager sellers at prices competitive to US wheat. Better rainfall in September has iproved soil moisture. The short term trend remains negative.

Support                     Resistance

Nov Beans                          14.86                            15.50

Dec Corn                              7.40                              7.64 

Dec Wheat                           8.50                               8.90

 

News