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3 Securities to Watch for the Heatwave
7/9/2012 10:37:00 AM
In many American cities, temperatures have stayed well above 100 degrees Fahrenheit for the last few weeks. While some could be seeing relief, cities that avoided the triple digit heatwave in the western U.S. are set to see temperatures spike. Here are some securities to watch for the continuation of the heatwave.
1. Teucrium Corn Fund (NYSE: CORN ): The Teucrium Corn Fund is an ETF that invests in corn futures--the front, second, and third month futures specifically. As the heatwave ravaged Midwestern states known for agricultural production, corn prices have risen. After the close today, the USDA is set to release its weekly Crop Progress Report. If the USDA reports that more crop was damaged due to the heatwave, corn prices could rise (as supply of good quality corn is expected to decline).
2. NV Energy Inc. (NYSE: NVE ): Nevada is one of the states expected to see a surge in temperatures over the next few days. Temperatures in Las Vegas could remain above 110 degrees for the next three days, ramping power demands. As temperatures climb, the stock price might as well, and investors may consider adding NV Energy to their portfolios as a bet on higher temperatures in Nevada.
3. U.S. Natural Gas Fund (NYSE: UNG ): Natural gas prices have had a strong run over the last few months, with benchmark Henry Hub Natural Gas futures rising from multi-year lows earlier this year. In April, prices traded below $2 per bcf and have since traded higher to $2.94 per bcf. Should the heatwave continue, demand for natural gas could increase, as it is used for powering homes and appliances. Thus, higher temperatures could increase demand for air conditioning, fans, and other summer-specific appliances, increasing demand for power and by default natural gas.
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