Tuesday, August 20, 2013

Weather continues to bid up grains and natural gas

As the weather continues to get warmer across much of the US, commodity markets have certainly started pricing in the changing outlook.

On Monday we saw corn and soybeans rally on the back of warmer and dryer conditions over the weekend, which look to be continuing into the future.

Many of the grain growing areas are in need of some late season rain and the current forecasts aren't looking overly promising.

Both outrights and spreads rallied, adding a further weather premium. However the spreads look like they could have potentially overshot the mark and could be in line for a pullback.

Natural gas started the week off stronger, pushing through the 3.40/mmbtu level which has been acting as resistance, as the additional heat across the bulk of the US should create more demand for gas fired electricity.

The spreads rallied early only to pullback to unchanged. I exited my positions last week on the back of the changing tone to the weather forecast.

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