C$32 million wasn’t enough for Cameco’s (T.CCO) investors today. The company announced that figure as its Q2 earnings, only to have their stock sell off C$2.70, or 4.5%, on the news.

But some of the losses may have resulted from the company’s comments during its quarterly conference call this morning. In short, CCO believes that the price outlook for uranium, although still bullish long-term, is less so for the second half of 2005.

According to the company, this is partly due to the hectic action in the uranium market during the first half of the year. This included 10 million pounds bought on the spot market in the second quarter of 2005, twice the amount for the same period a year previous. The total for the first half – 20 million pounds – in fact equals all sales for the entirety of 2004.

The jump in transactions resulted largely from the fact that the spot price and long-term contract price were highly divergent during the first half of the year. But this gap has now narrowed, and Cameco reports that spot demand has therefore fallen off significantly.

Another reason to suspect reduced sales over the coming months is that nuclear utilities are now stocked up for the near-term. And any further buying this year, Cameco believes, will be conducted by long-term contract rather than spot market purchases.

Fund purchases also appear to be declining. The first half of 2005 saw investment groups grabbing uranium with both hands, including a significant amount of buying by the newly-minted Uranium Participation Corp. (T.U). But these funds too are now largely stocked up, and will likely spend the rest of the year on the sidelines, waiting for their holdings to appreciate.

Cameco also noted that tightness in the uranium processing sector seems to be easing, a factor that could be negative for spot prices in the short-term. In fact, they mentioned an unnamed industry publication that’s calling for the spot price to drop for this very reason

Overall, CCO’s price outlook for the short-term is flat, even though the company remains bullish on the big picture. What does this mean for investors in uranium juniors? The big takeaway is to steer clear of companies trading solely on the recent wave of hype over the market. Rather, the best place to put your money is in firms with production, or approaching such, or in those that are actively moving projects forward through the drill bit. Such companies will be the ones best-positioned to gain when the market starts the next leg up.

A recorded version of the full conference call is available until August 12th on Cameco’s website.