by Jim Roemer – Meteorologist – Commodity Trading Advisor – Principal, Best Weather Inc. & Climate Predict – Publisher, Weather Wealth Newsletter
Mid-Week Advisory – August 7, 2024
In the coming weeks, I will have a special report about A.I. technology, weather forecasting, and commodity trading. You can sign up here to receive that and see a previous Weather Wealth report (from June), when I became bearish on corn and soybeans, based on my summer weather forecast for good Midwest crops and No La Niña.
So… how did we “out-forecast” all of the other weather firms and even some A.I. models that La Nina would not form this summer and that we would have a bear market in grains and excellent crops?
What most computer models miss is something we call “connecting the teleconnections.” The lion’s share of weather models uses ocean temperatures and local current conditions in thousands of cities to create algorithms that go into the European and GFS weather models. While these models have improved, thus allowing NOAA and many similar agencies to make fairly accurate weather forecasts, they often miss commodity weather more than two weeks in advance.
Teleconnections “connect” the dots between ocean temperatures and weather patterns thousands of miles away.
As you can see from my in-house program ClimatePredict (one of the few weather models in the world that incorporates teleconnections and historical weather trends), my prediction last April was that July was going to be great for most midwest corn and soybean crops. That will continue over 80% of the Midwest grain belt through August. Our one concern is the dryness for Kansas and wet weather delaying spring wheat harvesting in Russia.
My program has also been predicting improved global weather for sugar. soybeans, corn and potential cocoa crops going deeper into 2024 and 2025.
Anyway, at least two-thirds of the above-mentioned years that had many similar summer weather conditions in the Northern Hemisphere did not transition to La Nina until after October or not at all. Now, two to three months later, many models (such as the European) are not predicting that La Nina will form at all this year. How about that?
In addition, Warm ocean temperatures in the western Equatorial Pacific has resulted in the SOI (Southern Oscillation Index) being negative off and on this summer. This has cut down on the chance of La Nina, anytime soon.
This could have huge implications on commodities and possibly also suggest the hurricane season will NOT be as active as NOAA and many other services have been suggesting. Still, historic record warm ocean temperatures portend that one of two hurricanes later this fall could still explode into at least a cat 4.
Source: 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.
by Jim Roemer – Meteorologist – Commodity Trading Advisor – Principal, Best Weather Inc. & Climate Predict – Publisher, Weather Wealth Newsletter
It is already well known that U.S. corn yields may surpass 180 bushels per acre and for soybeans, at least 51 bushels per acre. There still continues to be some amateur meteorologists and/or advisory services out there that are talking about everything from hot/dry western corn belt weather, to drought in Ukraine, flooding to Russia’s spring wheat crop, hoping for a bull market. Sorry, Folks … it is n o t g o i n g t o h a p p e n at any time soon.
In addition, La Niña may be super weak later this year and does NOT necessarily portend major weather problems for southern Brazil or Argentina after November.
Presently, notice how the Southern Oscillation Index (SOI) is negative (El Niño like). The SOI index is a major climatological variable that influences the formation of La Niña or El Niño. The index needs to be positive for 2-3 months for NOAA to officially claim a La Niña is present. When that happens, low pressure sets up over Australia and high pressure near Tahiti. The Trade Winds then blow strong from east to west over the equator bringing cooler waters further west. As you can see, there are still warm waters to the east of Australia.
To make matters worse, if a narcissistic pathological liar gets elected as President… one who only cares about himself, not about you! (you know who I am talking about), and, if you are a farmer, then there are more problems ahead for lower grain prices. You are not only going to have to contend with storage of a record 2024 corn and soybean crop, demand worries from China but a possible Trade War with China.
With regards to the weather, we told our WeatherWealth clients late last week…
…that stratospheric warming (39-50 miles up above the atmosphere) was going to force the Arctic Oscillation Index to go negative. This is a warm block aloft, above the western Arctic circle that is going to push cool fronts over the Midwest the next 2 weeks and result in more ample rain and NO extreme heat.
Combine the negative AO index and NO La Niña yet and you have the continuation of mostly ideal weather in August for Midwest crops.
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.
As El Niño transitions to a neutral phase during the summer, sugar prices typically experience a downward trend due to several factors:
Improved weather conditions: The end of El Niño often leads to more favorable weather patterns for sugar-producing regions, particularly in major exporting countries like Brazil, India, and Thailand.
Increased production: With the return of normal weather patterns, sugar production tends to recover in countries affected by El Niño-induced droughts or excessive rainfall. This increased supply puts downward pressure on prices.
Market correction: Due to supply concerns, sugar prices often spike during El Niño years. As these concerns dissipate with the transition to neutral conditions, prices typically adjust downward to reflect the improved supply situation.
Stockpile replenishment: Countries and traders often take advantage of the improved production and lower prices to replenish their sugar inventories, which can temporarily support prices before leading to a more balanced market.
Other factors affecting sugar prices
It’s important to remember that sugar prices are not solely influenced by El Niño or La Niña alone. There are a few other factors that can play a big role:
Global demand: If people start consuming more or less sugar, or if the global economy shifts, it can impact sugar prices.
Government policies: The availability of sugar in the market can be affected by government policies, such as restrictions on sugar exports or changes to biofuel mandates.
Crop estimates: When new estimates are released about the expected production of major sugar producers, it can affect market sentiment and prices.
Crude oil prices: Higher crude oil prices can “sometimes” mean that Brazil producers convert more sugar cane to Ethanol to lower high energy cost risks. This lowers actually sugar cane production that can hit the market.
So, while prices generally tend to stabilize as El Niño ends, the exact changes in price can vary based on these other factors. I keep a close eye on weather patterns, production forecasts, and policy changes to predict where sugar prices might head next.
My Weather Spider helps gauge market direction for all ag markets and natural gas in my WeatherWealth newsletter.
Look at the Indian Monsoon and the recent weather in Thailand
Generally, normal rainfall for key India sugar cane areas and a bigger crop in Thailand this year, combined with the weaker Brazil Real are bearish for sugar prices.
India’s monsoon picking up has pressured sugar, as I suggested to Weather Wealth subscribers last week, and I have developed longer term option strategies for these clients.
Source: ClimatePredict: Jim Roemer’s long-range weather forecast software
Find out how we recently called for the collapse in grain prices with specific profitable options and futures strategies for farmers and traders on six continents.
What is our feeling about coffee prices from here?
How severe has the heat and dryness been in Brazil?
We will help you receive better weather forecasts and with trading ideas.
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
OVERALL BEARISH VIEW IN CORN AND SOYBEANS INTO JULY
by Jim Roemer – Meteorologist – Commodity Trading Advisor – Principal, Best Weather Inc. & Climate Predict – Publisher, Weather Wealth Newsletter
Wednesday Evening Report: June 26, 2024
Friday’s USDA planted acreage report has been known to throw “shockers” into the grain trade. For example, last year’s June 30th acreage report resulted in a surprise drop in soybean acreage and a modest increase in corn acreage. The result? The outcome is usually a major upward move in soybean prices and a collapse in corn prices.
Historically, however, traders turn their attention back to Midwest weather, which right now is ideal, other than flooding in the northwest corn belt. This flooding from the Dakotas, northern Iowa, and Minnesota will NOT be taken into account in this week’s report.
In the past two weeks, it has been our opinion that all of the chatter of hot-dry Midwest weather is HOGWASH because of this warming over Alaska called the negative Eastern Pacific Oscillation Index.
I alerted clients a few days ago about cooler weather. This also pressured natural gas, not just corn and soybeans.
Source: Weather Wealth Newsletter
But… could things change after July 6th?
Could there be a bull market in corn and soybeans later?
We’re offering our valued readers a COMPLIMENTARY ISSUE OF WEATHERWEALTH titled:
”A gift horse named “cocoa.” The collapse in corn and soybeans & historical USDA late June planting reports”
1) A look at recent rainfall maps in the corn belt and why the grain market has not yet gotten excited about potential hot weather deeper in June or early July;
2) Rainfall forecast for the next 10 days. Some flooding and severe weather are possible in the northwest corn belt. Will this cause some replanting of corn over to soybeans?
3) Strong El Niño events… How often did they transition to La Niña?
4) Why El Niño neutral conditions should exist through at least August.What does this mean? Weather and market volatility with a fluctuating SOI index;
5) Mexico’s record heat and drought. Indications for July temperatures?
6) A look at soft commodities and market action for orange juice, coffee, and sugar;
7) What does another record-warm winter suggest for summer temperatures? Are sunspots to blame?
Please feel free to download a complimentary past issue of WeatherWealth if you have not done so before.
HELPING YOU MAKE THE BEST INVESTMENT DECISIONS BASED ON THE WEATHER
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