Monday, July 30, 2012

"Natgas And Corn ETFs Explode As Market Eases" (UNG; CORN)

We don't have a lot of interest in UNG (the tracking errors) but the futures are up 6.37% at 3.207. This is within three or four cents of a short term top.
Dec. Corn futures were up 2.62% at $8.14 while September settled at $8.20 which I believe is an all-time record.
From Investors Business Daily:
Natural gas ETFs exploded higher and corn popped to a record while the market pulled back Monday after staging the biggest two-day rally of the year.
United States Natural Gas (UNG) — the largest ETF tracking the commodity — popped 6.11% to a 22.01, a five-month high.

UNG has exploded 53% from an all-time low in April. Meanwhile, natgas futures shot up 57% from a 10-year low in mid-April to more than $3 per billion cubic feet, or bcf, this week. Producers have cut back production in response to low prices, while demand from power plants increased to meet air-conditioning needs during the summer heat wave. Temperatures in the lower 48 states averaged 3 degrees higher than the 30-year average and 0.9 degrees warmer than the year-ago period.

"Extreme heat and relatively low natural gas prices have pushed gas for power generation to historically high levels this summer," the U.S. Energy Information Administration said in a weekly natural gas report. Power burn for the week ending July 25 averaged 34.9 billion cubic feet per day, 2.3% higher than that prior week and nearly 2% greater than the year-ago period. Baker Hughes natgas rig count decreased by four to 518.
Should the U.S. experience a cold winter after producers decreased production, supplies could evaporate at a record rate, says Shawn Hackett, founder of Hackett Financial Advisors in Boynton Beach, Fla. Natgas prices would have to rise back to $4 to $6 per bcf to entice producers to ramp up production again, he says.
U.S. natgas supplies currently are 18% above last year's levels and 16% above the five-year average, according to the EIA....

...Teucrium Corn (CORN) heated up 2.15% Monday to an all-time high of 51.15 as crops shrivel from the worst drought in 50-years. Futures jumped another 3% to a record high of $8.17 per bushel on the Chicago Board of Trade....MORE