The Indian monsoon is beginning to falter; the U.S. August weather is some of the coolest in recent memory and a super Typhoon has been blasting the Pacific. These may be signs, after all, that El Nino conditions are affecting parts of the globe.

Typhoon Noru in the western Pacific spun up rather quickly; with top speeds intensifying 90mph in just 18 hours.  Although it has weakened slightly, you can still see the large eye wall.

typhoon, el nino, formation

There have been multiple trading opportunities in commodities this summer. Soft commodities such as coffee and cocoa have been reacting to renewed concerns about weather and disease. But, the cool U.S. weather is helping to ease fears of the plains drought sending corn, beans and wheat prices spiraling south.

Cool temperatures impacting natural gas

In addition, we began telling our clients a week or so ago, that natural gas prices would likely be a sell, after a potential bullish EIA last week.  Here is a quote from our recent newsletter.

I expect we might see a rally shortly in natural gas, ahead of a potential friendly EIA last week, in the midst of extreme heat, but if we get a rally, traders should probably look to sell natural gas for a week or two, due to cooler weather coming to main areas.

The hot weather in much of July helped to inspire a couple of bullish EIA numbers, but this set the stage for a shorting opportunity.

How did we forecast a cool August that helped to break natural gas prices? Our proprietary analytical tool Climatech (below) uses teleconnections from around the globe that can help us forecast more accurately, weeks or months in advance.  The boxes you see on this chart illustrate various weather signals near Alaska, the Pacific Ocean and the Atlantic that suggested to us that 2004 might work best in the weeks ahead.

climatech, natural gas, futures

The 2004 analog is one with a very cool August (blue), at least the first half, this has helped to break natural gas prices 10% over the last week, as well as the collapse in soybean prices. For subscription information to use the best long range forecast program in the industry, email us at

In 2004, October futures prices dropped 20% from $5.9 to $4.7. The cool pattern stuck around all of August and limited cooling demand.    
natural gas, futures


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