Written by Sumit Roy  |

June 26, 2012

Morning Call: Corn Surges As Crop Rating Drops To 24-Year Low, Gartman Says WTI-Brent Spread To Close

Details

Hopes aren't very high that the summit—the 20th such time leaders have met to discuss the crisis—will produce anything substantive. Spanish and Italian 10-year bond yields were last trading up 11 basis points and 7 basis points, respectively, to 6.74 percent and 6.08 percent.

The U.S. Dollar Index was last trading unchanged at 82.48.

• Gold and silver are treading water, as the duo awaits a catalyst to take it out of its funk. The yellow metal was last trading down by $4.89, or 0.31 percent, to $1579.60/oz, while silver shed $0.27, or 0.99 percent, to $27.25.
  
  Platinum fell by $10.62, or 0.74 percent, to $1433.63 and palladium dropped $6, or 0.99 percent, to $602.25.
  
  "Gold is capped on the upside by disappointment post-Fed, while on the downside, we have some bargain hunting, and a bit of physical buying into the troughs," Societe Generale analyst Robin Bhar said. "We are stuck in a fairly small range here, in the 1570-1600 area, certainly until the weekend when we will get to hear more on how the euro zone will be [tackled]."
  Gold steadies near $1585 an ounce ahead of EU summit
  
  
• Crude oil prices are mixed, as Brent rises by $0.47, or 0.52 percent, to $91.48, while WTI loses $0.28, or 0.35 percent, to $78.91. Despite today's widening of the spread between Brent and WTI, Dennis Gartman sees the gap closing in the future.
  
  "This we think is the time then to sell Brent and buy WTI, having watched as the spread has been narrowing almost relentlessly and still likely to make its way toward parity, if not beyond, remembering that Brent sold for many years at a $1- to-$2-a-barrel discount to WTI," wrote Gartman.
  Oil Drops a Second Day as Europe Crisis Threatens Demand
  
  
• Natural gas is little changed at $2.69/mmbtu, a loss of $0.01, or 0.3 percent. A crippling heat wave is forecast over the United States during the next two weeks, but it remains to be seen whether it will be enough to spur gas above the formidable $2.75 resistance level.
  Chesapeake, Encana shares fall on report of land price plot
  
  
• Corn and soybeans continue higher today after surging in the prior session amid concerns that hot, dry weather in the growing regions of the U.S. will damage crops. The USDA corroborated the market's fears in its latest Crop Progress Report.
  
  The department rated only 56 percent of the corn crop as good to excellent and 53 percent of the soybeans crop as good to excellent. The corn crop is at its poorest condition in 24 years, according to Reuters, and may deteriorate further without rain.
  
  Corn was last trading up by $0.09, or 1.31 percent, to $6.39/bushel, while soybeans added $0.05, or 0.35 percent, to $14.88 and wheat fell by $0.06, or 0.86 percent, to $7.18.
  New-crop corn hits 7-month top on weather stress
  
  
• Copper was last trading at $3.31/lb, a loss of $0.01, or 0.23 percent, on Comex.
  
  "Given their cyclical nature, industrial metals have suffered from the deterioration of leading economic indicators," Credit Suisse said.
  
  "However, the sector remains a mixed bag. With the exception of tin, all markets are undervalued. The larger markets—copper and to a lesser extent aluminum—have better supply-demand balances and look healthier from a technical point of view, making them our preferred picks."
  Copper up as dollar falls, Europe subdues sentiment
  
  

What to Watch For: