Gold Options Report – May 18, 2012

Summary

June Gold settled at $1591.90 per troy ounce, a gain of $17.00 for the day.

Market Recap:

Gold futures extending their rally, adding to yesterday’s rally from strong technical report. While the European debt crisis appears as foreboding as ever (as attested to by Spanish bank downgrades and widely voiced expectations of a Greek exit), murmurs that the U.S. Federal Reserve may resume quantitative easing are quietly growing. Read more

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Posted May 18, 2012 by Editor.

Morning Call by Bryce Knorr

Opening Calls
Corn: Up 2 to 4
Soybeans: Down 5 to 10
Wheat: Up 3 to 5

Futures could see a mixed open this morning, as markets try to come to grips with what looks like a prolonged debt crisis atmosphere in Europe. With no resolution likely soon, traders are becoming a little less wary about buying commodities that look cheap.

Corn tries for a stronger open today, with July trying to break out of the downtrending channel that kept prices in check since March.

Tight old crop supplies continue to give July futures strength from bull spreading. Basis is firming again in the export pipeline, with the Gulf up a nickel yesterday after river bids showed weakness earlier in the week. For more, see my Weekly Basis Review and Cash & Basis Charts pages.

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Posted May 18, 2012 by Editor.

EXCHANGE NEWSWIRE, 18 May 2012

LME: CME, ICE and HKEx have all submitted bids of between GBP 1b to GBP 1.2b for LME, although there is still time for bids to be amended, the Financial Times reported. CEO Martin Abbott may make millions from the sale of the metals exchange, according to Reuters, which stated that Abbott could earn up a large part of the GBP 21m incentive scheme.

BATS Global Markets’ board is considering whether to be listed on a rival exchange once its re-looks at its IPO plans, the WSJ reported. BATS’ directors and executives aim be selling its shares publicly in another year’s time.

CME ’s plan to extend CBOT’s electronic trading hours by next Monday is being opposed by brokers, farmers and floor traders who argue that the extension in hours will make them less able to compete with HFT traders, according to the WSJ. Read more

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Posted May 18, 2012 by Editor.

Daily Technical Overview

JUL WHEAT Resist: 661 1/2*+/-, 676-680 ST Trend: Up
(657 3/4) Supprt: 647 1/4, 644, 638, 633* Obj: 661 1/2 TRP: 617.50
Comment: The explosive rallies of the past two days signals a bull turn and projects rallies to attack a weekly
resistance level at 661 1/2*. The strong close favors continuation rallies. A close over 661 1/2* implies moves
into the 680-700 zone. Be careful for a minor pullback from 661 1/2* on the first test that could lead to
consolidation inside yesterday’s range. Only a close under 633* marks a retreat back to 617 1/2* support. Tight
congestion should bull flag to setup for rallies.

JUL CORN Resist: 626 1/4, 632, 638 1/4* ST Trend: Up
(625) Supprt: 613 1/4, 610, 605 3/4* Obj: 638 1/4 TRP: 593.00
Comment: Surging rallies this week signal a reversing upturn and projects climbing advances to 638 1/4*. The
strong close favors continuation rallies and close over 626 1/4 will promote continuation rallies. We may see
minor consolidation of gains in the upper edges of Wednesday’s rally, but narrow congestion should bull flag to
setup for rallies. Only a close under 605 3/4* suggests back tracking to the 593* support point.

JUL SOYBEANS Resist: 1450+/-, 1460 1/2* ST Trend: Down
(1438) Supprt: 1419, 1404*, 1390- Obj: None TRP: 1460.50
Comment: The short term trend is still down, but a close under 1404* is needed to rekindle bear forces and
project selloffs against 1350 1/2* weekly support. The past couple rebounding days hints flagging corrections
that will probe rallies to test key 1460 1/2* resistance. A rejection from 1460 1/2* will likely trigger a turn back to
bear trending trade. A close over 1460 1/2* calls for a secondary drive back against the last swing high.

Morning Grain Comments: Friday, May 18, 2012

OPENING CALLS: Mostly Higher REASON: China futures prices weigh on soybeans, but corn & wheat aided by rising U.S. temps

CATTLE ON FEED @ 2 PM, CFTC REPORTS @ 2:30 PM

MORNING TRIVIA: This country just surpassed this country as the world number one gold consumer, combining for 54% of Q1 global demand…

MARKET HEADLINES:

Quick Editorial: Dalian soybean futures continued their month-plus decline
overnight, now over the equivalent of $1/bushel off early-April highs; that has
slowed CBOT beans’ momentum during a generally bullish week for the
grain complex. The bulls have been pointing to rapidly warming U.S. growing
area temperature forecasts this week, and this morning’s outlooks are certainly
doing nothing to alleviate those concerns, particularly starting Memorial
Day Weekend and beyond. One interesting point from the overnight session
was the equality of CBOT corn, beans, and wheat in terms of trade volume;
we’ve watched as soybeans have dominated trade (and subsequently led
the grain complex) over the last couple weeks, but aggregate totals from all
three commodities overnight were in the 21-23k range…
Argentina’s Ag Ministry yesterday cut their soybean production estimate by
another 1.4 million tonnes, to 41.5 MMT; that’s still above the Rosario Exchange’s
40.9 MMT and the BA Exchange’s 41.0 MMT, but below the
USDA’s 42.5 MMT number last week. 2011/12 corn output was trimmed by
200k tonnes to 20.1 MMT (the USDA also tops that estimate range, at 21.5
MMT), with the wheat harvest dropped by a similar amount to 13.2 MMT
(the USDA remains up at 14.5 MMT). Read more