Summer Outlook For Commodities
The weather in the Midwest may dictate the prices of corn and soybean futures through August. Extreme heat in the Midwest during the next few weeks would likely cause a rally in corn futures as it enters the critical pollination stage.
That is usually a longshot bet to expect extreme weather in a small time window to cause major damage, but rally can happen quickly just off a change in the weather report. Nonetheless, corn futures are dealing with an unexpected two million additional acres and rally probably wouldn’t extend too far.
Soybean futures enter their critical weather timeframe in August. Supplies are very tight on soybeans, so a weather scare could cause a sizeable rally. If the weather cooperates the next couple months, we may see lower prices for corn and soybeans.
Sugar futures are in the midst of a strong rally, so this is a market worth watching this summer. Unleaded gas futures have also been surprisingly strong and we could see this market rollover or make another leg higher. Gold futures should remain relatively quiet as the market is caught in a range between $880 and $980. Finally, is there a bottom in sight for lean hog futures? At the very least, it must be close.
On June 30th, China quietly announced an end to commodity stockpiling.
It is possible the driving force behind the commodities rally of the past few months has just been taken away.
Retest of the lows?
http://www.planbeconomics.com/2009/07/03/china-signals-end-of-commodity-stockpiling/
You can’t really trust much of what China has to say. They are masters at deception and manipulating markets. They have bought a good amount of grains and metals in the last couple months and I have to believe we won’t see much incremental demand anytime soon.
I do agree that the markets lost a major catalyst in the short term from China, but many commodities were extended. Short-term I see weakness due to several factors, but I don’t think commodities will retest the lows.