Written by Sumit Roy  |

June 27, 2012

Morning Call: Natural Gas Jumps To 5-Month Highs, Corn & Soybeans At 2-Month High On Heat Wave; Gold Down

Details

• Strength in the U.S. currency is pushing gold and silver slightly lower today. The yellow metal was last trading down by $4.91, or 0.31 percent, to $1568.02/oz, while silver shed $0.19, or 0.68 percent, to $26.93.
  
  Platinum lost $14.90, or 1.04 percent, to $1412.35 and palladium fell by $15.62, or 2.62 percent, to $581.63.
  
  "Bullion could still suffer from a relatively stronger U.S. currency, as gold's safe-haven appeal is failing to attract enough followers as players are going for the dollar or Treasuries," said analysts at VTB Capital.
  Gold eases with euro, commodities ahead of EU summit
  
  
• Crude oil prices are little changed ahead of the EIA's Weekly Petroleum Status Report. The less-authoritative API report showed that crude inventories rose by 0.5 mmbbl, gasoline inventories rose by 0.4 mmbbl, and distillate inventories fell by 1 mmbbl last week.
  
  Brent was last trading down by $0.17, or 0.18 percent, to $92.85, while WTI added $0.22, or 0.28 percent, to $79.58.
  Oil Falls as U.S. Supply Gain Counters Output Disruption
  
  
• The surge in corn and soybeans continues today amid fears that hot, dry weather in the U.S. growing regions will damage crops. On Monday, the USDA said the corn crop was already in the poorest condition in 24 years.
  
  "The number of bushels being subtracted daily from the U.S. crop is running over any worries about a decline in demand," said Marty Foreman, an economist at Doane Agricultural Services. "Until we see significant and widespread rain in the Midwest, no one knows how far yields can fall this year."
  
  Corn was last trading up by $0.17, or 2.59 percent, to $6.63/bushel—the highest level since early May—while soybeans rallied by $0.17, or 1.14 percent, to $14.87—also the highest since early May. Wheat was last trading at $7.30, a gain of $0.01, or 0.14 percent.
  Heat Wave Wilts Corn as Supplies Diminish Most Since 1996
  
  
• Like grains, natural gas is benefiting from the heat wave in the U.S. Demand for gas may rise as electricity generation increases. Prices were last trading up by $0.07, or 2.49 percent, to $2.84/mmbtu—the highest level since January.
  For Energy Producers, Natural Gas May Not Be the Only Source of a Glut
  
  
• Copper is up fractionally to $3.31/lb, a gain of 0.02 percent.
  
  "There have been negative headlines surrounding the EU summit with Merkel's comments. It is not really fundamentals that are driving commodity markets at the moment as the macro overlay is putting pressure on prices," Robin Bhar, an analyst at Societe Generale, said.
  Copper slips on eurozone caution, EU summit eyed
  
  
  

What to Watch For:

8:30 a.m. ET: Durable Goods Orders (May)