Time to buy

It looks like the natural gas (NYMEX:NGN14) will continue to flow as Russia extends its deadline to June 9, so negotiations about payment and price can continue. It also is so Russian President Vladimir Putin can look statesmen like on the world stage as global leaders participate in the 70th anniversary of the D-Day landings on June 6. Is this a sign that a deal most likely will get done or is it because Vladimir Putting might feel funny cutting off Europe's gas supply ahead of the Normandy Remembrance. This will put him face to face with leaders from Europe as well as President Obama himself. Not that he cares that much about what President Obama thinks, the real power player now is German Chancellor, Angela Merkel, who has the most to lose or gain from the talks on gas. While the oil (NYMEX:CLN14) market is reducing some risk premium they are far from sold on the idea that these negotiations will keep the gas flowing.

In the meantime China's manufacturing number came bouncing back expanding at the fastest pace since December giving copper a renewed lift to the higher end of the recent trading range. The Chinese Purchasing and the National Bureau of Statistics' purchasing managers' index rose to 50.8 in May from 50.4 in April. Europe on the other hand slowed as the Markit Economics' E.U. PMI of activity fell to 52.2 in May from 53.4 in April. This though will only increase the odds for Quantitative Easing European style. This may support Brent Crude (NYMEX:SCN14) despite promises by Libya that their oil fields would be back up and running. Reports that heavy fighting is happening in Benghazi, between the armed group Ansar al-Shariah and irregular forces loyal forces loyal to Khalifa Haftar, a former army general that has tried to take control of the country.

Grains on the other hand, other than oats, are under pressure as the weather in most of the country is perfect for grains. Warmth then rain than warmth again. So far it's like the greenhouse effect. Its kind of like growing the nations crop in a green house!

Oats though still are fighting for rail space for oil. The Wall Street Journal reported that Western Canadian oats industry continues to suffer from a lack of rail cars allocated to move south, forcing some companies to move the product by truck to U.S. millers. Shipping oats by truck freight can be expensive and result in lower prices for farmers and higher prices for end-users. Prices around C$3.00 to C$3.20 per bushel is being offered in Manitoba for old crop, according to Prairie Ag Hotwire.

"In Saskatchewan there's a lot of places that don't have bids at all because the elevators are not sure when they're going to get cars," he said. "The inconsistency of [availability of] cars makes it so the big grain companies don't want to do oats. "If the railways are going to try to do the 5,500 cars a week, they have to go where they can turn their cars the fastest, and that's not going to be U.S. destination anything," he added. Since U.S. millers haven't been able to source oats from Canada easily because of the lack of rail cars, they have turned to other sources such as Europe. This has reduced demand for the Canadian product.

Grain analyst Jack Scoville predicted he weakness on the Price Links Network. Check it out: https://www.youtube.com/watch?v=8OrCT2JB1e4&feature=em-subs_digest

About the Author
Phil Flynn

Senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at pflynn@pricegroup.com. Learn even more on our website at www.pricegroup.com.


Futures and options trading involves substantial risk of loss and may not be suitable for everyone. The information presented by The PRICE Futures Group is from sources believed to be reliable and all information reported is subject to change without notice.

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