Below are excerpts from my recent WeatherWealth newsletter. Many agricultural commodities are breaking out to the upside and the weather is definitely a key reason. In contrast, warmer U.S. weather returning and worries over a potential increase in domestic oil production, combined with trade tariff concerns have pressured energy markets again.
The new bull market in many agricultural commodities could add to inflation worries once again
It was these wilting trees in 2024 that have now resulted in recent crop survey tours with many analysts lowering their 2025-2026 Brazilian crop by another 5-10%.
Improved October rainfall kept the situation from being even more of a disaster. Nevertheless, coffee stocks continue to fall and the charts are very bullish.
In addition, a stronger Brazilian Real results in farmers holding back on sales of commodities such as coffee, soybeans and sugar.
Going forward, the big question for the coffee market is “How will a weak La Niña event (or neutral situation) affect production in Vietnam, Colombia and Brazil, deeper into 2025-2026?” I will have studies later on. of course.
Nevertheless, due to Theta (time decay) for certain coffee option strike prices, we suggested call option strategies that were potentially profitable for those WeatherWealth clients who took our advice two months ago.
Why cocoa prices have higher to go, even at these historical levels
One of our most successful recent trade suggestions to WeatherWealth clients has been in cocoa. Prices have now soared more than $11,000 a contract in two weeks on growing new concerns for the 2025 West African mid-crop, but also potentially for the main crop. The crop problems never end in West Africa. In my opinion, this is brought on more by climate change than by El Niño or La Niña events.
My in house teleconnection program looks at weather signals thousands of miles away to second guess standard computer models.
Typically with a weak La Niña (negative MEI index), we can see a wet signal for West African cocoa (+3.45).
However, notice that a total of six of the most important climatic variables I look at above (Indian Dipole and record warm ocean temperatures in the Atlantic and near West Africa) are all dry signals (negative values). One combines all of these and we can see that humidity levels and rainfall will remain below normal, thus hurting more of the cocoa crop.
Why, In The Face Of A Bear Market In Sugar, We Reversed Our Attitude
Other than the Brazilian Real breaking out technically that can often help sugar and coffee prices, new weather problems in Australia from harvest delays and a lower crop in Thailand, as well as in India, helped sugar prices rally 10% off their lows.
We caught wind of this around January 21st and advised subscribers to our WeatherWealth newsletter that I was no longer bearish and to look for potential buying opportunities.
Is it too late to buy sugar now. Is this old news? That’s where our newsletter comes in handy for many markets. We also issue “Weather Spiders” each week for all markets.
Sources: A Real Sugar Expert & WeatherWealth Newsletter
Learn how to trade commodities successfully based on weather, the commitment of traders, technical analysis and other signals. Join farmers, traders, agribusinesses, natural gas producers and ETF enthusiasts around the world who want to benefit from more accurate weather information and timely trading strategies.
Jim Roemer, Scott Mathews, and The Weather Wealth Team
Mr. Roemer owns Best Weather Inc., offering weather-related blogs for commodity traders and farmers. He also is a co-founder of Climate Predict, a detailed long-range global weather forecast tool. As one of the first meteorologists to become an NFA registered Commodity Trading Advisor, he has worked with major hedge funds, Midwest farmers, and individual traders for over 35 years. With a special emphasis on interpreting market psychology, coupled with his short and long-term trend forecasting in grains, softs, and the energy markets, he established a unique standing among advisors in the commodity risk management industry.
Several times a year, we offer farmers and commodity traders on six continents a free issue of WeatherWealth: The only global commodity weather newsletter that focuses strictly on the weather with specific trading ideas in commodity options, futures, and ETFs.
Some of our best calls over the last two years were predicting mostly big global crops for grains and the resulting bear markets. The stronger dollar and worries over demand from China have also impacted prices adversely. La Niña did not form last summer, as I predicted it wouldn’t. This helped set the stage for a record corn and soybean crop. But, what about now?
Will a La Nada or La Niña be present when we move into 2025?Could a bull market in grains eventually form?
The biggest bull weather markets over the last 2 years have been in cocoa and coffee brought on by Climate Change, deforestation, and a previous El Niño.
In the last three winters, a trader could have sold natural gas in December and potentially gain at least 20-35% on his/her money by March. Almost every winter of the last 5 years has been warmer than normal. What about now?
Our latest newsletter (download on top of the page) discusses the following:
1) The difference between an El Niño neutral (La Nada) and La Niña
2) How winter weather could be affected by both
3) What are the MJO index, and a negative PDO index?
4) How record-warm global temperatures could offset a potential cold signal for U.S. natural gas heating demand areas
5) What will it take for the Midwest grain areas and Plains wheat to have hot, dry weather next summer?
6) Why soybean prices may remain in a downward trend
7) How Climate Change has caused an explosion in cocoa prices
8) A discussion of the volatile coffee market and the impact of recent drought stress in Brazil
9) Australian crop weather
10) La Niña and a look at historical sugar prices
11) Trading ideas in commodities, and…
12) …Much more
Enjoy,
T H A N K S F O R Y O U R I N T E R E S T I N C O M M O D I T Y W E A T H E R !!!
by Jim Roemer – Meteorologist – Commodity Trading Advisor – Principal, Best Weather Inc. & Climate Predict – Publisher, Weather Wealth Newsletter
Weekend Report – August 23-25, 2024
To View Video > > > > > PLEASE CLICK BELOW
In this video, I talk about:
Why La Niña did not form this summer and how I predicted the bear market in grains last June
BestWeather Spiders: What are they and how to use them to trade everything from soybeans to coffee
Global Atmospheric Angular Momentum is finally turning negative: How this resulted in some short-term heat and dryness in parts of the Midwest grain belt. Will it last?
Northern Brazil’s drought and how it may affect OJ, sugar, and coffee production and prices.
West African dry weather is helping the cocoa market again. What’s in store, weatherwise?
See how we predicted $9.50 soybean prices and sub $4.00 corn, 2-3 months ago, what’s ahead for soft commodities, and more. You can also receive a 2-week free trial period
Thanks for your interest in commodity weather!
Jim Roemer, Scott Mathews, and The Weather Wealth Team
Mr. Roemer owns Best Weather Inc., offering weather-related blogs for commodity traders and farmers. He also is a co-founder of Climate Predict, a detailed long-range global weather forecast tool. As one of the first meteorologists to become an NFA registered Commodity Trading Advisor, he has worked with major hedge funds, Midwest farmers, and individual traders for over 35 years. With a special emphasis on interpreting market psychology, coupled with his short and long-term trend forecasting in grains, softs, and the energy markets, he established a unique standing among advisors in the commodity risk management industry.
Trading futures and options involves a significant risk of loss and is not suitable for everyone. Past performance is not necessarily indicative of future results.
On the date of publication, Jim Roemer did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
Most recently, since June,we’ve stated our opinion that “fading” ALL computer models that suggested La Niña would form later this summer. In addition, all these summer grain market bulls “completely missed the boat” as our clients were advised about a potential collapse in corn and soybeans, as early as mid June on perfect summer corn belt weather!
How did we do that? First of all … standard GFS and European models are “free to the public.” You get what you pay for: erroneous models which often cannot forecast the weather accurately more than a few days in advance.
My 40-year experience in “second-guessing” computer models and my understanding of market psychology comprise The Key.
We also offer our in-house long-range weather software that all subscribers can access. It is called ClimatePredict (www.climatepredict.com).
It performs analyses of the history and behavior of teleconnections and correlates agricultural commodity crop growing areas, while incorporating:
Arctic Sea Ice (or lack thereof);
Better prediction of El Niño or La Niña;
Ocean temperatures thousands of miles away,
Dozens of other phenomena, etc
Jim Roemer’s initial objective, back in June of $9.50 soybeans (from $11) and sub $4.00 corn, helped farmers hedge their production weeks ago and aided traders in adopting various futures and options strategies. In only a couple of months, one trade alone (just in grains) would have paid for my newsletter for several years.
We are finally seeing the signs of potentially the first weather scare of the summer for some hot-dry weather. Is it time to buy corn and soybeans? Are the markets oversold?
This installment, early last week, discussed the following:
1) Fading computer models all summer, predicting record corn and soybean yields for Midwest grain farmers and the bear market (back in June). Will prices for soybeans reach $9?
2) Best Weather Spiders: How to use them to trade Ag and natural gas commodities
3) Why the next big bull market may be in coffeeas extreme drought remains in Brazil & how recent coffee market volatility based on varying weather forecasts from the recent very light Brazil frost
4) Why our bearish outlook in sugar prices from 21 cents predicting a great Indian Monsoon has now been scaled back
5) Climate Predict: BestWeather’s in-house weather and crop production model for global commodities (free with an annual subscription to WeatherWealth)
6) Trade ideas from grains to soft commodities and natural gas
Thanks for your interest in commodity weather!
Jim Roemer, Scott Mathews, and The Weather Wealth Team
Mr. Roemer owns Best Weather Inc., offering weather-related blogs for commodity traders and farmers. He also is a co-founder of Climate Predict, a detailed long-range global weather forecast tool. As one of the first meteorologists to become an NFA registered Commodity Trading Advisor, he has worked with major hedge funds, Midwest farmers, and individual traders for over 35 years. With a special emphasis on interpreting market psychology, coupled with his short and long-term trend forecasting in grains, softs, and the energy markets, he established a unique standing among advisors in the commodity risk management industry.
Trading futures and options involves a significant risk of loss and is not suitable for everyone. Past performance is not necessarily indicative of future results.
This video below talks about the following from July 5th:
How Hurricane Beryl may affect commodity markets (this is old news now)
Why it has been coffee most adversely affected by a warming planet
The potential for a bull market in grains later? Possibly, but our overall bias for weeks has been “against the crowd” predicting doom and gloom for U.S. grain crops. For now, the delay of La Niña has prevented any major widespread weather problems for corn and soybeans, other than a few isolated areas
Why traders were wrong being bullish natural gas over $3.00 a few weeks ago
Click above and also feel free to join my YouTube channel
by Jim Roemer – Meteorologist – Commodity Trading Advisor – Principal, Best Weather Inc. & Climate Predict – Publisher, Weather Wealth Newsletter
MAY 1, 2024
A few weeks ago, it became obvious to me that buying cocoa on a 400% rally would be a huge mistake and prices might soon mimic what happened during the “Tulip Craze” in the 1600s. Dutch Tulip trading is the first well-documented speculative commodity bubble. The same thing has just happened to cocoa prices.
W h e n t o s e l l a p a r a b o l i c c o m m o d i t y m o v e ?
In order for me to justify entering a short position in a rising futures market, I need to see a change in the “fundamentals” of the particular commodity, ahead of time:
For cocoa, this is the time of the year that the smaller West African Mid-crop hits the market. This often results in hedge fund selling occurring ahead of and during harvest.
Most of the bullishness in cocoa was already built into prices.
I have been preaching this to my newsletter clients for a couple of months: That the “seasonals” would ultimately become bearish for cocoa.
Source: Moore Research Center, Inc. (MRCI)
Below, are four examples in which the weather, or other fundamentals, caused a major collapse in commodity prices. Parabolic moves often last less than 6 months. Such was the case in cocoa.
Below are some of the technical indicators to call potential tops in markets. This is extremely sophisticated. Typically, I use fundamental analysis when the 5-day moving average goes above or below the 20-day moving average (see cocoa, below).
Look for Divergences:
Examine indicators like RSI, MACD, or momentum indicators for divergences between the price action and the indicator.
When the price is making new highs but the indicator fails to make a new high, it can signal the parabolic move is losing steam.
Identify Overextension:
Use technical tools like Bollinger Bands or standard deviation channels to identify when the price has moved too far, too fast, and is becoming overextended.
Parabolic moves often reach levels 2-3 standard deviations above the mean, signaling a potential reversal.
Examine Volume Patterns:
Look for a sharp drop-off in trading volume as the parabolic move progresses. (This began in cocoa three weeks ago)
Declining volume can indicate waning enthusiasm and buying pressure to sustain the move higher.
Apply Fibonacci Retracement Levels:
Draw Fibonacci retracement levels (23.6%, 38.2%, 61.8%) from the start of the parabolic move.
One of these common Fibonacci retracement levels is where significant reversals often happen.
Watch for Blow-Off Tops:
Identify capitulation-type price spikes with extremely high volume at the end of the parabolic move.
These “blow-off top” patterns can signal the final exhaustion of buyers before a sharp reversal.
Bottom line (WRITTEN APRIL 8TH): “A change in fundamentals and the 5-day moving average going below the 20-day often signal a major trend-change. It is possible that (based solely on history) cocoa prices will peak soon (or have just peaked) and enter a deeper bear market in 2024-2025.This would be especially true if La Niña results in a slight surplus of cocoa next year.”
Nevertheless, prices have sold off too quickly to justify selling the market at these prices. Early on Tuesday (4/30), WeatherWealth clients were advised to take potentially huge profits on recent short positions. BUT short call options and longer term (limited volume) make sense.
In early April, the issue addressed parabolic moves and how to navigate them. If interested in joining expert and novice commodity traders around the world who want better weather information and trading ideas, please request our free 2-week trial period to the WeatherWealth newsletter.
Thanks for your interest in commodity weather!
Jim Roemer, Scott Mathews, and The Weather Wealth Team
Mr. Roemer owns Best Weather Inc., offering weather-related blogs for commodity traders and farmers. He also is a co-founder of Climate Predict, a detailed long-range global weather forecast tool. As one of the first meteorologists to become an NFA registered Commodity Trading Advisor, he has worked with major hedge funds, Midwest farmers, and individual traders for over 35 years. With a special emphasis on interpreting market psychology, coupled with his short and long-term trend forecasting in grains, softs, and the energy markets, he established a unique standing among advisors in the commodity risk management industry.
Trading futures and options involves a significant risk of loss and is not suitable for everyone. Past performance is not necessarily indicative of future results. There is no warranty or representation that accounts following any trading program will be profitable.
HELPING YOU MAKE THE BEST INVESTMENT DECISIONS BASED ON THE WEATHER
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