Dog Days of Summer
What cliché can you call these markets these days? Summer doldrums? Dog Days of Summer? Or plainly light volume and scared investors weighing what side of the market to position with Mother Nature playing a big part on fears of what to expect next. With the heat index rising and concerns about rain or lack of rain. The U.S. dollar rallying and the FED and central banks casting doubts on their next move, which sabotages the average speculators motivation in the light volume we are currently experiencing. In the overnight electronic session the September corn is currently trading at 343, which is 1 ¼ of a cent higher. The trading range has been 346 ½ to 341 ¾. With the weather fronts clashing bringing dramatic turns to heat, hail, rain and high winds we can also think of what the FED has up there sleeve to be a sub sequential mover in the commodity sector.
On the Ethanol front we once again had quiet activity last night as this market is following the movement in corn, Crude Oil and Gasoline prices, which of late has been futile to grasp a solid trend to follow. The August contract settled at 1.521 and is currently showing 3 bids @ 1.504 and 2 offers @ 1.530. The range between the bids and offers should paint a picture to what speculators fear the most.
On the Crude Oil front the weekly API data showed a draw of 2.3 million barrels. With the August contract expiring, we still held a 10-week low. I expect the market to trade the same channel of $44 to $50 a barrel until the next event that will create a new headline that will push the market in one direction or the other. I still remain wildly bullish. In the overnight electronic session the September Crude Oil is currently trading at 4543, which is 2 tics lower. The trading range has been 4572 to 4533. The weather and uncertain geo-political events should bring speculators and hungry bulls back to the table.
On the Natural Gas front again weather speculators are trading off what different weather modules are forecasting which is slowing down any rally at this point. In the overnight electronic session the August contract is currently trading at 2.688 which is 4 cents lower. The trading range has been 2.730 to 2.676. I am sticking to my guns and wearing my rally cap as I expect the heat to put the winds in this markets sails.