Gold gets to $1,200 on the rising fear factor as Europe continues its tumultuous slide as riots start to brreak out heavily in Greece.  Gold is starting to become the worlds reserve currency as the correlation between Gold and the USD becomes obsolete for the moment.  Gold  has a top here at $1,225 and i think for the moment that you will see some resistance at this level between there and $1,210.  The Eurozone however seem to be in desperate times so stay on top of the news over there to see if there are any big bailouts coming that way.  This will surely have a negative effect on the Gold market

Crude Oil finally liquidated to $75 on the back of a plunging equity market and the trouble going on in Europe.  WTI spreads were the first key indicator as spreads started to get very weak 3 weeks agio as supplies continued to rise in cushing.  I believe that this $75 mark is a very big support area and Crude will bounce off this as traders start taking profits on the 13% slide.  The VIX has increased every day and this is good for the day trader as you can probably see swings of $2 or more every day in the energy market.

An article I found:

Author: LeAnn Ormsby
December 2010 corn futures traded to a high of $3.95 in mid-April, retreated to a low of $3.67 early last week, and then rallied back to $3.95. The current price is about $.40 above the contract low established in early September 2009 and about $.75 below the high reached in early June 2009. The contract high, reached in mid-2008, is over $7.00.

According to University of Illinois agricultural economist Darrel Good, weakness in corn prices starting in mid-April primarily reflected supply considerations: generally favorable weather for planting, expectations that acreage could exceed March intentions, and expectations that the 2010 yield would be above trend value due to a majority of the crop being planted early.

“The current strength in corn prices reflects more favorable demand prospects,” Good said. “There is a fair amount of optimism about corn demand in each of the three major categories of consumption.”

Recent data confirm increasing production and consumption of ethanol. Expansion is being driven by extremely favorable ethanol blending margins. Wholesale gasoline prices have increased from about $2.00 per gallon in mid-February to over $2.40 now. During the same time period, ethanol prices have declined from about $1.75 per gallon to about $1.60 per gallon.

“The current spread between gasoline and ethanol prices results in a very high return to ethanol blending, even before the $.45 per gallon blender’s tax credit,” Good said. “The price spread is large enough that E-85 prices could be competitive at the retail level. Favorable blending margins should continue to support demand for ethanol so that corn consumption for ethanol production during the 2009-10 corn marketing year could exceed the current USDA projection of 4.3 billion bushels. There is ongoing concern about the ‘blend wall’ for ethanol if mid-level blends are limited to 10 percent, but that wall clearly has not been reached yet.”

Good said the recent increase in hog and cattle prices has also triggered ideas that feed and residual use of corn during the current marketing year might exceed earlier expectations. However, even with a decline in the feed and residual use of sorghum and another summer of relatively low feeding rates for wheat, feed and residual use of corn above the current USDA projection appears unlikely.

“The low level of use during the first half of the year combined with declining hog and cattle numbers and expanding production of distillers’ grains makes the current projection of 5.45 billion bushels look a little high,” he said. “That projection is 200 million bushels above use during the 2008-09 marketing year.” Good added that the category of use is feed and residual, so that surprises can occur. The USDA’s June 1 Grain Stocks report will shed more light on the rate of use.

According to Good, improving corn export prospects have provided most of the recent optimism about corn demand. The release of some corn from domestic reserves in China, along with the issuance of import licenses a few weeks ago, has been followed by some small purchases of U.S. corn. China has not imported significant quantities of corn since 2001-02, when it imported 40 million bushels. The last year of large imports was 1994-95 with 170 million bushels being imported.

“The magnitude of U.S. corn imports by China this year is very uncertain, but recent purchases come at a time when overall sales of U.S. corn have been increasing,” Good said.

The USDA weekly reports indicate that new export sales averaged 50 million bushels per week for the four weeks ending April 22, compared to an average of 28 million per week in the previous 10 weeks.

“New sales need to average 38 million per week from now through August in order for sales to reach the USDA’s 1.9 billion bushel export projection,” Good said.

Weekly shipments averaged 38.2 million bushels per week during the seven weeks ending April 29. To reach 1.9 billion for the year, shipments from now through August need to average about 38.8 million bushels per week.

“The tug of war between improving demand prospects and expectations for a large crop in 2010 will likely continue, resulting in a continued wide trading range for corn prices,” Good said. “Stronger demand, however, increases the importance of crop size. If improved demand is confirmed, there may be less downside price risk and an opportunity for a move back to recent highs if crop problems develop.”

Tuesday, 27 April 2010 - Rumours of a fire at a major rapeseed processing facility on the continent turned out to be true, with a Bunge-owned plant on Friesenheim island at Mannheim in Germany the unlucky victim.The fire apparently started at around 12.30 yesterday lunchtime and took 72 fire fighters to bring under control.The plant had a processing capacity of 1.1-1.3 MMT of oilseeds and is expected to be out of action for some time. Reports suggest that force majeure has already been claimed on contracts for delivery in the next 2-3 months.

China has sold a further 1.1m tonnes of corn from state reserves, amid signs that its selldowns are cooling the rally in domestic prices which has spurred some processors to investigate imports. All 800,000 tonnes offered in the north eastern provinces sold, the National Grain & Oil Trade Centre said. Trade was slower further south from the main producing regions, with successful bids for only half the 570,000 tonnes offered in Hebei, Jiangsu and Shandong. The trends echoed those of last week, China’s first selldown of state reserves this year, when Beijing sold some 850,000 tonnes of 1.1m tonnes on offer. However, prices were modestly lower this time, falling by 1.6% to 1,702 remninbi a tonne in the north east. On China’s Dalian exchange, the near-term May contract closed down 0.3% at 1,925 remninbi a tonne, losing all but 4 remninbi of its premium over the July lot. Dalian prices have recorded a slight decline since Beijing two weeks ago unveiled its auction plans, after an increase some 12% in the previous two months. The rally, which in some areas has driven prices to record highs, has prompted some feed mills to make inquiries over importing corn, rumours of which drove Chicago prices sharply higher earlier this month. China, the world’s second biggest producer and consumer of corn, has not imported the grain in any quantity since the early 1990s. The country has also this month ramped up imports from the US of distiller’s grains, a by-product of corn ethanol plants used in animal feed. Beijing is estimated by China Zhongzhou Futures to have “temporary” corn reserves of some 10m tonnes, largely held over from the bumper 2007 and 2008 harvest, with an unknown quantity of further stocks.

Article taken from The Times (UK) dated March 25 after the first Iceland volcano eruption.Quote:A volcano that has been dormant for almost 200 years erupted on Sunday. Eyjafjallajökull volcano in southern Iceland erupted with a sheet of fire and spewing out rivers of lava, forcing hundreds of people to evacuate their homes. For an Icelandic volcano this was a relatively small eruption, but there are fears that it could set off the nearby Katla volcano, a far more violent beast capable of inflicting immense damage.The precedents are not good. In the past 1,000 years, Eyjafjallajökull has erupted three times, in AD920, 1612 and 1821, and each time the Katla volcano blew up soon afterwards. And because Katla lies under a glacier, it sets off colossal floods as the ice rapidly melts. Worse still, Katla can shoot up enormous plumes of ash, gas and acid high into the atmosphere, blocking out the Sun’s energy and creating a deep chill.The effects on the UK could be severe. In June 1783 the Laki volcano close to Katla erupted for several months with clouds of poisonous gas that killed 9,000 people in Iceland. But the eruption also created a cold fog that spread across much of Europe and North America, in some places causing the coldest summer for 500 years as the Sun’s warmth was blotted out.“The summer of the year 1783 was an amazing and portentous one, and full of horrible phenomena,” wrote the naturalist Gilbert White in Hampshire. “The country people look with a kind of superstitious awe at the red louring aspect of the sun thro’ the fog.” The climate across the northern hemisphere was sent into upheaval, even weakening the monsoon rains in Africa and India, leading to famine in Egypt and India.

As a floor broker I find it worthwhile to identify points at which the market, any market, seems vulnerable. Such vulnerability may be cause for trading opportunity, however mostly it benefits short term trading. Longer term trades may also benefit from identifying those places where a market is vulnerable, but the size of the move should also be larger for positions held overnight in these markets.

What are helpful features of vulnerability? Chart points such as highs and lows obviously, as well as moving average levels, but beyond those you might also consider as a market approaches option expiration those strike prices that contain significant open interest. Countless times we have see a shift in a market to move towards a strike price.

Currently the coffee market is approaching option expiration and while earlier this week it appeared as if 140 would be the better candidate, yet low and behold here we are the day before expry trading 135….Now that is an example. The point being that whenever a market approaches expiration, and coffee isn’t there until tomorrow afternoon, it may always be a good idea to consider the vulnerability of prices reaching out for a strike price….and usually one that isn’t as obvious offers specs a cheap play and those seeking a hedge a reasonable opportunity.

It  has been an interesting week her on the NYMEX as the flatprice in crude has rallied to new highs at $87 but the wti spreads have weakened considerably especially in the front months as now May/June and June/July have a handle of -63 on it now.  Jun/Dec has weakend all the way from -130 to -230.  The backs are holding up well with Dec10/Dec11 trading at -135 but this has also come down from -90.  Is this a sign that the flatprice will come off in the next few days?  It may be a sign but just wait and see what happens on Wednesdays inventroy report.

Gold has recently climbed to test the triple top of $1,150 that has been a big hindrance to the yellow metal even as the USD strengthens up against other major currencies.  Gold needs to break above the $1,160 level to test the all time high and I think that you will see this later on in the year.  Right now the big hurdle is right in its path so watch for the next few days as this market tries to bust through this level.

Unexpectedly, we have plenty to talk about today. Deutche bank announced they are expanding their coverage of agricultural commodities to encompass soybeans and kc wheat. This goes against earlier stories that they are contracting coverage. The latter story was a rehash of the story from october 2009.

The second story involves Brazil and the US concerning ethanol. This is a major shift if its true. An elimination of a 20% import tariff would be a bullish impact on corn.

More to follow as its made available.

MPI