HELPING FUTURES TRADERS SINCE 1997

WEEKLY FUTURES REPORT

 10.10.12

 Filed 1:45 AM 10.11

                                       Last                        Last Week (10.03.12)

Nov Crude                    91.25                           88.14

Nov Heat                      3.2131                           3.0664

Nov Gas (Blended)      2.953                             2.7995

Crude rallied sharply on Tuesday on increased tension in the Middle East against a negative fundamental supply/demand picture. Weekly inventory figures released by the Department of Energy were delayed by a day due to the Columbus Day holiday on Monday. The weakness in crude seen on Tuesday was probably due to statements coming out of the International Monetary fund warning of further world economic weakness going into year end. OPEC also released a report which slightly lowered their projections for world demand and restated that world markets at this juncture are basically well supplied. Cancellations of North Sea deliveries have widened the spread between Cushing West Texas Intermediate and North Sea Brent. Dollar strength is a crude oil market negative. Tuesday’s 3.4% advance in price was termed b many as short covering. Tight supply in gasoline supplies in the Northeast were a positive. Changes in West coast blending requirements have led to an oversupply in gasoline on the west coast US. A Richmond California refinery will remain closed until year end. Geopolitical risks remain especially with Turkey fortifying its border with Syria. A collapse in the Iran rial has pushed back immediate pressures to undertake military actions against that country. It’s widely viewed that sanctions against that country are working and may exert enough leverage to convince Iran to back away from its nuclear program. Money flow in crude is negative. Money flow in heating oil is negative. Money flow in gasoline is positive which leads to a counterintuitive spread of being long gasoline, short heating oil.

As for the charts…Tuesday’s sharp rally only brought prices back to the mid Bollinger allowing prices to head lower again if backed by fundamentals from the inventory report on Thursday.

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METALS

                                              Last                                    Last Week

Dec Gold                            1765.10                                  1781.00

Dec Silver                            34.10                                      34.68

Jan Platinum                     1678.50                                1691.50

Continuing signs of Chinese economic contraction were a negative for the metals complex. Negative supply/demand differentials in the oil complex were a negative. Harvest pressures in the grain complex were another negative influence on metals pricings. Statements form the IMF that the Euro zone would continue to economically contract was a negative. Dollar strength was a negative. The stock market pricing in weak Q4 profits was another negative. Chinese gold production coming in 10% higher than last year was a negative. Lack of buyers from India was a negative. Contracting macro models has offset the platinum bullish case due to workers striking. Money flow in gold is negative.  Money flow in silver is negative. Money flow in platinum is negative.

Higher close after a doji is a modest positive technically for silver.  Lower close after a doji is a modest negative for platinum.

                     Support                   Resistance

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SOFTS

                                   Last                             Last Week

Dec Coffee                163.45                           181.05

Mar Sugar                21.26                              21.58

Lack of storm damage in Vietnam and cooler weather in Brazil worked to pressure prices lower. Lack of producer buying was a negative. Lack of Brazilian exports coupled with slow export activity pressured prices. Stronger dollar and sloppy equity markets were also negative influences on price. An increase in volume coupled with negative price action was a negative for price moving forward. Fund traders are building a short position in coffee.

Technical action in sugar is positive. Output from Brazil’s key growing region contracting by 8% was a positive. Monetary stimulus in the face of economic contraction from China was viewed as a positive for sugar.

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GRAINS

Money flow in soybeans is negative. A stronger dollar hurt export potential. Anticipation of lower than expected Q4 earnings for US corporations lifted the dollar higher and depressed dollar sensitive commodities. The market will be anticipating the USDA report on Thursday morning. The trade is looking for an announced yield of 37

bushels an acre. Many believe that an upward adjustment in yield is already baked into the price. 58% of the soybean harvest is completed.

Technically, the move off the lower Bollinger wasn’t enough to even kiss the mid Band.

Most of the activity in corn was repositioning or exiting the market ahead of the USDA report on Thursday. Lack of export demand is the drag on this market. 69% of the harvest is complete.

Trade this week was light. 57% of the harvest is in. Some farmers are withholding crop from the market to firm up prices. Wheat is stuck in a range.

                                       Support                     Resistance

Nov Beans                          14.86                            15.67

Dec Corn                              7.10                              7.51

Dec Wheat                           8.50                               8.79