Weekly Futures Report
Filed 9:16 pm Wednesday
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July XRB (Blended Gas)
Crude oil rose yet again in price on Wednesday, a day after June
futures expired. Crude traded at $62 dollars a barrel for the first time in
six months after the Department of Energy report showed that US inventories
fell more than previously forecast. Crude stocks were down by 2.44million
barrels for the latest reporting week. The market had been looking for a
400,000 barrel decline. Another factor in the rising price of crude oil has
been very weak dollar. Another positive was unrest in Nigeria. Crude oil is
up 39% for the year. This rally has surprised some traders given the
overhang of supply in the marketplace. Yesterday, the American Petroleum
Institute reported that crude stocks declined by 4.47 million barrels.
Refinery runs however dropped to 81.8% of capacity, down 1.9 percentage
points from last week. Refineries are obviously holding back increasing
their output because they just don't see demand. Total US daily fuel demand
averaged 18.3 million barrels for the past four weeks, down 7.6% from a year
earlier. Gasoline stocks were down 4.3 4 million barrels to 204 million
barrels. The trade was looking for a decline of 2 million barrels. There are
also disruptions at US refineries. The catalytic cracker in Corpus Christi
Texas was shut down after a fire yesterday. Also there was a fire at a
Sunoco installation at Marcus Hook, Pennsylvania. Traders continue to watch
the developing situation in Nigeria. It's widely expected that OPEC at its
next regularly scheduled meeting on May 28 will not lower production levels.
The dollar fell to its lowest level in four months against the European
currency on reduced borrowing costs and interest-rate flows. Money Flows for
crude and its products remain positive.
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June Gold 938.70
July Silver 14.28
July Platinum 1154.90
Gold rose in New York as demand increased and the value of the dollar
fell suggesting inflationary pressures. Yesterday, the dollar weakened
against the euro after Goldman Sachs, J.P. Morgan Chase and Morgan Stanley
said they were ready to repay $45 billion in government bailout cash. Also
the fact crude oil traded at $62 first time in many months was a market
positive. The US Dollar Index has dropped more than 3.2% for the month which
encourages gold investment. Meanwhile, the US economy continues to show both
signs of expansion and contraction. Homebuilders broke ground on fewer homes
than expected, leaving housing starts down 13% to an annual rate of 458,000.
There was also a fall in building permits. The cost of borrowing money also
continues to decline precipitously. Money flow in gold remains positive.
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Sugar prices were basically steady over the last five sessions. The
belief is in the marketplace is that these prices, the highest since 2006,
are slowing demand. Unless physical interest in the market picks up, sugar
should continue to trade sideways to lower. Sugar has rallied so far this
year based on the idea of the prospects for a global production deficit
because of crop declines in India, the world’s second largest grower and
Coffee rose to its best level since last September helped in part by
the strength in US equities market and weakness in the dollar. The dollar
fell to its lowest level of the year against a basket of major foreign
currencies. Coffee is higher by 19% this year based on tight supplies from
Columbia, world second-largest supplier after Brazil.
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July Soybeans 11.674
Wheat rose to its best level since January. Weather delays continue to
plague the planting of the spring crop and threaten to curb yields of winter
varieties in the US. The United States is the world's biggest exporter of
wheat. So far 50% of the spring wheat crop has been planted down from the
usual expectation of 90% at this time. Parts of Kansas received as much
three times normal rainfall. Wet weather can increase fungal diseases. Wheat
is the fourth-largest crop in the United States.
Soybeans eventually may come under pressure if there continues to be
problems with the wheat and corn crops. Soybeans can be planted late in the
growing season s and still achieve high yields. In fact, soybeans, this
year may be the crop of last resort.
July Corn 4.160
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 RESULTS.