A major stratospheric warming event can sometimes force very cold weather upon key natural gas heating demand areas. This is what normally happens for late February and March when the AO index goes negative. However, I have “faded” this solution to our WeatherWealth clients touting an overall bearish view in natural gas, most of this winter.
The record warm global oceans are contributing to latent heat release (evaporation and more water vapor in the Atmosphere). This is resulting in:
Improved rain chances for Argentina’s key soybean growing areas again deeper into February
Northern Brazil rainfall to rescue a coffee crop, beaten down by previous heat and dryness in December-January
A warm global outlook for natural gas regions with weakened LNG exports
In addition, El Niño has actually strengthened a bit again. The SOI index has gone the most negative of the winter due to the MJO phase, You can see here my warm forecast for the month of March from last week:
So… how do you trade natural gas, grains and other markets? After all, the CFTC Commitments of Traders report shows a large net short speculative position (managed money) in many commodities that may be bound for profit-taking. That is what we do at WeatherWealth (short and long range weather forecasts, but also specific trading strategies one cannot get from any meteorologist. For example, we told natural gas clients recently about the price comparison to the warm 2020 winter.
(chart) Natural gas prices are mimicking the warm 2020 winter. Prices are even lower than $1.60 in part due to a lack of LNG exports and warm weather in Europe as well as the US
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Click on the video above to see how various climatic factors will affect winter weather and the natural gas market.
Discounts are available for small traders and farmers. Find out, how one trade alone, such as being short natural gas in early November pays for my newsletter for two years.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS AND THERE IS ALWAYS A RISK OF LOSS IN COMMODITY TRADING.
After a massive sell-off in natural gas prices the last few weeks on a warm late fall and huge production, the NAO turning negative may offer some colder, snowier risks for the eastern third of the U.S. But, is it enough to warrant a major rally in natural gas futures?
Overall, however, our WeatherWealth newsletter has been bearish natural gas for more than a month, helping clients to potentially capitalize on various options and future strategies.
In this video (click above), I discuss the MJO index and how we use it as a weather forecasting tool in conjunction with El Niño:
Where the MJO will move to, and if it will influence the outcome of northern Brazil’s soybean drought;
the potential for a colder outlook in U.S. natural gas heating demand areas; and
a continuation of disease issues for West African cocoa.
While Equatorial Pacific Ocean temperatures are very warm suggesting strong El Niño conditions, other variables do not justify El Niño being more than weak-to-moderate.
For example, the MEI index (above) is a better representation of how strong El Niño is. This takes into account global atmospheric angular momentum GLAAM), and the SOI index and is also influenced by the progression and strength of the MJO.
Feel free to download a complimentary issue of one of my full WeatherWealth reports with recent trade ideas here and how we forecast longer-range weather for farmers and traders on six continents.
My video talks about what is going on in South America concerning some new weather problems for soybeans, sugar cane, and possibly coffee (though recent rains have been great news for the early coffee bloom in Brazil).
I also show some interesting images of historic artifacts being exposed by lowering water levels and record drought in the Brazil Amazon, and a look at solar cycle 25 and the active sun.
Sunspot cycles occur every 11 years. Without going into too much detail, the number of sunspots is approaching 2014 levels. In layman’s terms, this means the next sunspot cycle peak should not occur until at least 2024 or 2025.
In my view, and of many NOAA and MIT scientists: “solar cycles do not have the effect they once had on global weather due to the warming planet and stratosphere.”
Currently, it is El Niño and the Amazon rainforest drought and deforestation emergency that will determine many agricultural commodity price moves based on South American weather over the next few months.
Sign up for my El Niño report and some occasional free weather and commodity updates below.
A cold late October and possibly November will be the rule for parts of the Midwest and Eastern U.S. This is because El Niño is weak-moderate (not a strong El Niño event), and a negative GLAAM is present.
The video above discusses Global Atmospheric Angular Momentum (GLAAM) and how that can influence El Niño and winter weather.
A cold late fall and early winter could keep natural gas prices firm on breaks if (GLAAM) remains negative and El Niño does not strengthen.
However, it remains to be seen if there will be a longer-term bull market in natural gas, for which inventories are still large. The recent rally in prices was due to pre-winter hedge fund buying, war tensions overseas, and lower rig counts,
If GLAAM remains negative and El Niño is weaker
The globe had yet another record-warm year and the Arctic and oceans are warming at a record pace. This could offset what would otherwise be a consistent severely cold northern Hemispheric winter. But if global angular momentum (GLAAM) remains negative, this could offset Climate Change a bit.
If GLAAM becomes positive and El Niño strengthens
In contrast, strong El Niño events are often accompanied by positive GLAAM and warm winters. If this occurs, a bear market in natural gas prices will occur.
I will be developing various natural gas futures, options, and ETF strategies for subscribers, shortly.
January snow cover with negative and positive GLAAM
By mid-winter, negative GLAAM winters typically have above-normal snowfall in the Northeast and parts of Europe and Asia (bottom image).
Negative GLAAM usually refers to La Niña, but there are weak to moderate El Niño events that can occur and be quite snowy.
In contrast, the winters with the strongest +GLAAM (top image) and El Niño have below-normal snowfall in the eastern U.S. and would be bad news for ski resorts and bearish implications for natural gas and heating oil spreads. However, winter has not started yet and a lot can happen.
Negative GLAAM winters often are snowy in parts of the eastern U.S., Europe, and Asia.
HELPING YOU MAKE THE BEST INVESTMENT DECISIONS BASED ON THE WEATHER
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