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The Bear Case
CNBC.com | March 12, 2012 | 11:25 AM EDT

Shares of iPath Dow Jones UBS Natural Gas, an exchange traded note that is a proxy for natural gas futures, are down 45 percent over the last year, which could weigh on the performance of energy stocks likeEncanawith significant natural gas production.

Chesapeake Energy said in January that it plans to slash spending on gas drilling by more than $2 billion this year, and analysts expect more exploration and production companies to follow suit.

Too much of a good thing is also weighing on the value of many agricultural commodities .

Stockpiles of rice are nearing record levels due to a combination of record production by China, other Asian growers increasing inventories, and falling imports.

Rice futures have dropped more than 25 percent in the last six months on oversupply concerns. Wheat futures are also being weighed down for the same reason.

PowerShares DB Agriculture Fund, which owns stocks of companies engaged in farming and crop protection, is off 14 percent over the same period.

The situation is similar for coffee, which has been trending down close to $2 per pound.

With stocks eclipsing levels last seen before the financial crisis and the momentum of ample liquidity on their side, Steel Vine’s Patton recommends dumping commodities lacking strong supply/demand fundamentals.

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