Extreme heat in much of the deep south and west is beginning to create a new bull market in natural gas, but what about corn and soybeans? Right now, my biggest concern is for flooding in the NW corn belt that may mean a switch from some corn to soybean acreage. The potential also exists for some heat heading into July.
Back in April, our forecast for drought-easing Midwest rains, combined with terrible demand, helped pressure grains sharply. This collapse may be surprising in the face of lower and lower Russian wheat crop yields and damaged South American corn and soybean production. However, it will take consistent heat and dryness later to foster a new bull market in corn and soybeans.
Could this happen? Perhaps. In my view, occasional weak El Niño conditions are holding on. I predict a hot July for parts of the Midwest corn belt based on what I’m seeing about the global climate, as per the maps below. The key factors are record flood levels coming to Florida combined with a warm signal from a NINO4 and a negative PDO.
1) Solar Activity:
My point of view : T h e r e is z e r o c o r r e l a t i o n b e t w e e n s u n s p o t c y c l e s a n d gl o b a l w e a t h e r.
Perhaps, 50-100 years ago that might have been the case… but not today, with record global ocean warming brought on by man-made influences. Do you think that all of these record-warm years are cyclical and due to the sun? Guess again… NO! The chart below shows how the planet has warmed since the 1880s whether solar activity (yellow line) was high or low.
2) Similar teleconnections and a look at July rainfall trends
The negative PDO in the Pacific, along with warming and an El Niño signal east of Australia (NINO4 region), combined with cooling near Peru (La Niña signal) has only happened simultaneously in two years since 1950. Depending on how these teleconnections fluctuate in the next few weeks, may result in a dry July in parts of the corn belt and take the bearishness out of the grain market.
3) Signs El Niño/La Niña conditions are going back and forth
Volatile global weather patterns have N O T H I N G to do with solar cycles but everything to do with record-warm global oceans and the oscillation of El Niño/La Niña among other teleconnections.
My program is available for all WeatherWealth subscribers. The purpose is to apply weather forecasts to predictions about market trends for agricultural and energy commodities.
Shown below are the incredible rains that hit Florida: more typical of El Niño lingering than La Niña
Will we enter a new bull market in corn and soybeans? For natural gas, we became bullish last week. Please feel free to download a recent complimentary sample issue of our newsletter here, or join farmers and traders around the world who want a much better edge trading commodities on the weather, with a 2-week free trial to WeatherWealth
The seasonality in natural gas prices and why the market collapsed 15% the last week
Why some late-season moisture from Nebraska to Kansas/Oklahoma and some rains in Ukraine pressured wheat prices
Weakening El Niño events and possible implications for weather in the corn belt
Why late spring crop prospects are looking excellent in most places resulting in a new bear market in corn
Get better updated weather forecasts second guessing standard computer models for the summer grain and natural gas markets, plus trading ideas from a 40-year veteran. https://www.bestweatherinc.com/new-membership-options/
Enjoy!
Thanks for your interest in commodity weather!
Jim Roemer, Scott Mathews, and The Weather Wealth Team
Please feel free to learn about Jim Roemer, our track record, and how we use weather to help traders, hedgers, and investors. If you have any questions, please don’t hesitate to drop me a line – Scott Mathews, Editor
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.
by Jim Roemer – Meteorologist – Commodity Trading Advisor – Principal, Best Weather Inc. & Climate Predict – Publisher, Weather Wealth Newsletter
Memorial Day Weekend Report: May 24-27, 2024
Silver plays a crucial role in the global green economy, particularly in renewable energy technologies and sustainable practices. With more global weather extremes and record-warm oceans, environmental technologies that utilize silver will only grow in the years ahead.
We have been slapped with unprecedented weather events: Historic snowfalls in California this winter and the rapid melting of Arctic ice. In addition, we have witnessed floods and landslides from Houston to southern Brazil.
The need for new technologies to combat climate change is being accelerated by only a few of the dozens of weather extremes.
Source: chart by KITCO and comments by Best Weather, Inc.
Just take a look at how record-breaking global ocean temperatures brought on climate change (to a greater extent than by El Niño) is opening the door for more silver-based technologies in the environmental sector.
We are seeing the silver market soar and the inevitable scenario is on the horizon for a $50 per ounce price tag.
Solar Energy: Silver is an essential component in photovoltaic (PV) cells built into solar panels. Silver paste is applied to silicon wafers that conduct the electricity generated from sunlight. In 2020, over 100 million ounces of silver were consumed in PV cells for solar energy. As the world transitions to renewable energy sources, demand for silver in solar panels is expected to grow significantly.
E l e c t r i c V e h i c l e s: Silver is widely used in automotive electrical systems due to its excellent conductivity. Nearly all electrical connections in modern automobiles, including those in electric and hybrid vehicles, are outfitted with silver-coated contacts and membrane switches. The rise of electric vehicles will drive increased silver demand.
W a t e r P u r i f i c a t i o n: Silver is used in water purification systems, both residential and commercial, due to its antibacterial properties. As the green economy emphasizes sustainable water management, the use of silver-based water purifiers is likely to increase.
R e n e w a b l e E n e r g y S t o r a g e: Silver is a key component in batteries used for storing energy from renewable sources like solar and wind. The growth of renewable energy will necessitate more efficient energy storage solutions, boosting silver demand.
A n t i b a c t e r i a l A p p l i c a t i o n s: Silver’s antimicrobial properties make it valuable in various green applications, such as textiles, bandages, and medical equipment, reducing the need for harmful chemicals.
When it comes to weather forecasting and my commodity analysis, I don’t write about the technology in the business of artificial intelligence. Nevertheless, silver has several important applications related to AI.
Silver is an excellent conductor of electricity, making it essential for electronic components in AI systems like computer chips, circuit boards, and interconnects. Its high electrical conductivity allows for efficient data transfer and processing. It is used in memristor devices, which can mimic the behavior of biological neurons and synapses. Memristors made with silver nano-wires can form artificial neural networks for neuromorphic computing, a brain-inspired approach to AI. Silver nanoparticles and nano-wires are being researched for use in random access memory (RAM) and non-volatile memory devices that could enable faster and more energy-efficient AI hardware.
As I mentioned above, silver is a crucial material in solar panels due to its superior electrical conductivity. Because AI systems require immense computing power and energy, solar panels with silver play a role in providing renewable energy for AI data centers.
So… in summary, silver’s unique properties make it an indispensable material in the global green economy, and AI technology, particularly in renewable energy expansion, sustainable water management, and eco-friendly applications that prioritize resource efficiency and environmental stewardship.
Join ETF investors, commodity traders, and farmers who want a huge advantage in understanding how the global climate is affecting everything from coffee and soybean futures to cocoa and even silver. Receive a 2-week free trial period to WeatherWealth. https://www.bestweatherinc.com/new-membership-options/
(The only all-global weather and commodity newsletter with trading ideas)
Thanks for your interest in commodity weather!
Jim Roemer, Scott Mathews, and the Weather Wealth Team.
Please feel free to learn about Jim Roemer, our track record, and how we use weather to help traders, hedgers, and investors. If you have any questions, please don’t hesitate to drop me a line – Scott Mathews, Editor
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 involve 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.
“You can’t change the weather, but you can profit from it”
“Meteorology’s MJO index: What it means and how it is affecting sugar and coffee prices”
by Jim Roemer – Meteorologist – Commodity Trading Advisor – Principal, Best Weather Inc. & Climate Predict – Publisher, Weather Wealth Newsletter
– May 14, 2024
The MJO index tracks an area of enhanced rainfall and storminess that travels around the global tropics every 30-60 days. It measures the strength and location of this propagating wave of cloud cover and precipitation. The MJO can have a significant impact on weather patterns across the globe by influencing the strength and location of the jet streams, formation of tropical cyclones, monsoon patterns, and development of El Niño and La Niña events.
Meteorologists closely monitor the MJO index because when the MJO is active, it provides better predictability of weather systems around two weeks in advance. A strong MJO signal over the Indian Ocean or western Pacific can increase the chances for tropical cyclone formation in those regions. Conversely, when the MJO is weak or incoherent, weather patterns tend to be more unpredictable at lead times beyond about a week.
The climatological effects of the MJO are especially relevant in Southeast Asia. For example, over the next two weeks or so, look how the rotation of this disturbance in what we call “phase 5” will bring important drought-easing rains to Vietnam coffee and Thailand sugar cane areas.
Of course, the U.S. dollar, Brazil’s Real, technical chart patterns, crop conditions in other countries, and the CFTC’s Commitments of Traders reports are all big factors for soft commodities. However, this little-known disturbance (MJO) is a background influence on the recent collapse in Robusta coffee (Vietnam production) prices and for sugar, as well.
Source: NOAA & WeatherWealth newsletter
Important rains coming to the Tropics may prevent a return of a soft commodity bull market
As one can see, drought stress has expanded and rainfall is critical to get the 2024 sugar cane and Robusta coffee crops off to a decent start.
Source: NOAA
Brazil is the largest sugar producer in the world. Currently, parts of Brazil’s sugar cane area are experiencing heat and dryness. This has benefited the nation’s upcoming huge harvest in 2024, however, it could threaten the 2025 crop. Presently, as the sugar chart illustrates below, traders and producers are comfortable with what could be a big rebound of sugar production in Thailand and India if the monsoon kicks in this summer.
Three weeks ago, we called for the end of the parabolic commodity hype in the cocoa market. In our newsletter we talked about parabolic markets and when to recognize they may be over and to sell into the bullish fever.
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.
“You can’t change the weather, but you can profit from it”
(note: Weather maps and BestWeather spider are by Jim Roemer and added to this article by BestWeather, Inc.)
Coffee futures rallied last month, with the benchmark robusta variety climbing to a record and prices for arabica at their highest since 2022. But analysts suggest that prices for both have topped out for the year as weather conditions in Vietnam look to improve.
Robusta coffee futures peaked in April and have been selling off since, said Jake Hanley, managing director and senior portfolio specialist at Teucrium.
Drought in Vietnam, the world’s largest robusta coffee grower, is curtailing production, “driving local prices higher, incentivizing farmers to hold on to their beans rather than sell them,” he told MarketWatch. He cited a Bloomberg report that said Vietnamese robusta coffee farmers have failed to deliver up to 200,000 metric tons of beans under contract.
The coffee market is a “weather market and volatility should be expected,” said Hanley, but there is talk that drought conditions in the Central Highlands in Vietnam will let up by the end of this month, he said.
On the ICE Futures Europe exchange, the most-active July contract for robusta coffee D00, +0.09%DN24, +0.82% hit a record intraday high at $4,575 per metric ton on April 25, based on data going back to 2008, according to Dow Jones Market Data. Based on Wednesday’s intraday trading, it was around 3.3% lower for the week, but has climbed 12.4% year to date.Robusta coffee prices have dropped from a record highSource: FactSet
Robusta and arabica are the two most common types of coffee beans produced and sold, according to Bean & Bean Coffee Roasters. Robusta coffee makes up 40% of global coffee production is commonly used to make instant coffee, and is cheaper to produce, while arabica makes up about 60% of global coffee production and requires more energy and resources to grow.
The rise in robusta coffee prices to all-time highs “inadvertently” helped Arabica “rally more than it should have,” said James Roemer, the publisher of the WeatherWealth newsletter.
Since then, there have been forecasts for rain in Vietnam — that, along with the stronger U.S. dollar and record long speculative position in coffee, “caused a major washout” for prices, he said.
Looking ahead, without a frost scare in Brazil, prices for arabica could trend to the $1.50 to $1.70 area come July or August, said Roemer.
For robusta, following expected rains over the next two weeks, the crops in Vietnam could still be hit by dryness this summer as weak El Niño conditions exist, he said. Most forecasters are calling for La Niña conditions, which could bring heavy rainfall, but he does not expect that until after September.
Meanwhile, Roemer said Chinese demand has not been a factor in coffee’s rise this year, with demand having been weak against the backdrop of a record-warm global winter.
Coffee is technically weak, Roemer said, and the market will “need to see the dryness return in June and July in Vietnam and/or a Brazil freeze scare to see a new bull market again.”
Jim Roemer’s Weather Spider featured for grains, soft and natural gas commodities each week in his WeatherWealth newsletter
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
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.
