Author: Michael Ferrari, PhD
VP, Applied Technology & Research
Last week’s call for a stronger downside move materialized, and further verified the view that we have been pushing since late November of last year. May10 futures are currently below our recent downside target of 23 cents; as such, we are advising clients to look at the current trading range as a favorable entry point for first through third futures, with possible opportunities for exit over the next two months. There seems to be more consensus among market analysts that the global deficit will start to shrink as we move through 2010. While WTI is not expecting a strong production rebound for the current crop year out of India, we are anticipating a very good crop originating from Brazil’s Centre-South, which ultimately, is far more important concerning global stocks. India’s poor crop last year overshadowed the relatively favorable growing conditions in the Sao Paulo region, and the continuation of a weakening but present El Nino-driven pattern will help to put additional physical supply back on the market during the latter stages of the current calendar year.
