There’s a new bull market in town other than cocoa, gold, silver, and most recently crude oil (Middle East tensions and stronger global demand). It is coffee. Our WeatherWealth newsletter https://www.bestweatherinc.com/membership-sign-up/ advised clients close to a month ago about a potential severe drought developing for Robusta Vietnam crop regions (similar to the lingering spring El Niño conditions in 2016).
In contrast to other firms suggesting La Niña will form this summer, we have disagreed. In fact, some computer models just came out agreeing with our feeling that occasional weak El Niño conditions will persist until at least June or July.
So… how does that influence global coffee weather? For one thing, it may turn too wet for parts of northern Brazil’s coffee, following earlier heat and dryness in December-January. This was related.
Not only due to El Niño but also to deforestation in the Amazon and climate change.
Source: EPA.GOV
However, of even greater concern is the continuation of record levels of tight Robusta coffee supplies. Irrigation levels are extremely low. Combine this with nearly record April heat (map below) and a pesky high-pressure ridge, and one can see why Robusta prices are testing historic high levels.
Another parabolic commodity move, similar to cocoa as the planet continues to warm
Consequently, will I change my forecast to more rain and a bearish outlook? How does one use coffee spreads, futures, or options to potentially capitalize on the lingering El Niño? That is where WeatherWealth comes in. Please feel free to click on the link at the top of the page for a 2-week free trial period covering all Ag and natural gas markets. You will also receive my BestWeather Spiders with trade sentiment for a dozen commodity products… for example: Robusta coffee advised a month ago.
The temperature index score is now very bullish at a +4 with record heat in Vietnam. This makes the total score very bullish at at least a +9.
by Jim Roemer – Meteorologist – Commodity Trading Advisor – Principal, Best Weather Inc. & Climate Predict – Publisher, Weather Wealth Newsletter
Thursday Evening Weekend Report – March 28-31, 2024
Worried about losing one second of time? The melting Polar Vortex is not only creating more and more of a warming planet, but is also speeding up the Earth.
My video (above) addresses how I predicted another warm winter, the collapse in natural gas prices and which analog years might be helpful to predict summer grain markets and crops. Enjoy!
Anyway, in the next couple of years, we’ll all lose one second from our day. It may not seem like much, but this tiny adjustment to our clocks is being impacted by the massive melting of polar ice due to climate change.
The length of our days is determined by the Earth’s rotation speed. As that spin gradually changes based on shifts in the planet’s surface and molten core, we occasionally need to add or subtract a “leap second” to stay in sync.
Source:NOAA
While we’ve added plenty of extra seconds over time as the rotation slowed, the Earth is now speeding up again. For the first time ever, we’ll need to remove a second instead of adding one. But, the unprecedented removal could create unforeseen issues for computing systems used to only adding time.
The kicker? This leap second subtraction was originally forecasted for 2026, based on the accelerating spin. However, the study shows the melting ice caps are enough to delay that milestone day of lost time all the way until 2029. A tiny difference, but one more stark reminder of the profound impact human-caused global warming has on the fundamental systems that govern our world.
In just a couple years, we’ll actually need to remove a second from our clocks – something that’s never been done before. And the surprising reason? Human-caused polar ice melt.
While the slowing effect of tides has dominated Earth’s rotation changes historically, the melting ice sheets are now a major factor speeding up our planet’s spin. As that ice shifts from the poles towards the equator, it’s causing the entire Earth to rotate faster, like a figure skater pulling in their arms.
However, another force in the planet’s core is outweighing even the ice melt acceleration right now. We don’t fully understand these mysterious core processes 1,800 miles below, but they are inexplicably spinning up the solid outer shell independent of the liquid core’s motion.
The net result is an increasingly sped-up rotation requiring that unprecedented “leap second” subtraction soon, (likely in 2026) according to the study. It’s a seemingly minuscule adjustment, but one with huge implications for things like stock exchanges and computing systems only designed to add time, never remove it.
To me, it’s simply astounding that human activities like burning fossil fuels have now measurably altered something as fundamental as the literal spin of our entire planet on its axis. A stark reminder of our growing impacts.
When it comes to commodities, One of the impacts has of course been the collapse in natural gas prices once again. Selling natural gas in the fall and getting out in the early spring has worked “almost every time” the last few years. My Spider, which was firmly bearish at a -8 back in December, is a bit more neutral now at these prices, but I see nothing to get excited about in this market given such massive global supplies
As we head towards the spring and summer weather markets in grains and soft commodities, find out how to trade better, get a jump ahead of other weather forecast firms, with a 2-week free trial period to WeatherWealth, here:
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
Membership Options – Best Weather, Inc | Jim Roemer Jim Roemer’s | Best Weather inc Memberships provide the best weather insight reports for multiple industries. Whether you are a farmer or day trader these reports will give you insight on making the best decisions for your future
These are the climatic factors resulting in incessant rains in southern Brazil, while northern Brazil has record heat:
A mix between strong vs. weak El Niño conditions
The MJO is moving into phase 2/3
Deforestation of the Brazil rainforest
Flooding and landslides triggered by heavy rains in southern Brazil have claimed at least six lives over the past week, The fatalities occurred in the states of Santa Catarina and Rio Grande do Sul, and major property damage in the latter was reported as thousands of people sheltered in gymnasiums.
Southern Brazil has been hit by historic rains in the last few months. This could threaten soybean planting and production in two of Brazil’s key producing states.
Soybean planting in Brazil is way behind schedule (Source: AgResource)
In contrast, extreme heat is threatening soybeans in Matto Gross (the #1 soybean-producing area)
Climatological factors causing a wide variety of Brazil weather
There are a few key factors that can contribute to a pattern of flooding in southern Brazil and heat in the north during November in an El Niño year:
El Niño shifts tropical rainfall northward, leaving southern Brazil and Rio Grande do Sul susceptible to frontal systems and atmospheric river events that stall and lead to heavy rainfall and flooding.
The warmer tropical Atlantic waters during El Niño allow more moisture transport into southern Brazil, increasing rainfall intensity.
With reduced tropical rainfall across northern Brazil during El Niño, prolonged heat is more common as subsidence and dry conditions dominate.
Weakened easterly trade winds allow cold fronts to penetrate farther north into Brazil’s northern regions during El Niño.
These displaced fronts and overall circulation changes enhance north and south Brazil’s temperature gradient and extremes.
Deforestation of the Amazon in conjunction with El Niño, has built a huge, hot ridge in northern Brazil.
We have a mixed situation in the jetstream pattern in the Southern Hemisphere right now, while Pacific Ocean temperatures are incredibly warm, portending strong El Niño conditions, other variables we look at depict weak El Niño conditions.
The MJO
There is also a climatic phenomenon called the Madden-Julian Oscillation Index (MJO. It is like a traveling pulse of storms and rainfall that moves eastward around the equator, and it is a weather pattern that can influence things like monsoons and tropical cyclones. This makes the weather more active in some regions and quieter in others. Picture it as a cycle of increased and decreased rainfall marching across the globe.
Contrasting two El Niños: The MJO was in similar November phases during these 2 infamous El Niño events. One was weak (2009) and one strong (2015). Both of these years had heavy rains and flooding in parts of southern or central Brazil affecting either sugar cane or soybeans.
This November, it is soybean areas in Rio Grande Do Sul (#2 biggest Brazil soybean producer) and Santa Caterina experiencing the worst effects of flooding.
As my discussion illustrated at the top of this report — El Niño can often bring heavy rains to parts of central or southern Brazil. The most recent infamous case was in the fall (Brazil spring) of 2009. The result was extreme crop stress and dilution of Brazil’s sugar crop.
Brazil’s sugar crop was diluted due to heavy 2009 rains. There was also a drought in India as there was this year.
Global weather and crop conditions suggest two different types of El Niño events
During weaker El Niño events, such as in 2009 (2nd map below), notice how much further north heavy rains were during October than during the strong El Niño of 2015. This was much more of a detriment to the sugar crop than to other commodities like coffee or soybeans.
CONCLUSION:
Global weather patterns are fluctuating between weak and strong El Niño conditions. Despite its weakness, historically weak El Niño events, like 2009-2010, impacted global crops such as sugar and cocoa, leading to notable market volatility.
This season, intensified weather extremes in Brazil, fueled by a strengthened northern Brazil ridge, raise concerns for soybean production in Matto Grosso. The heightened ridge, stronger than in November 2009, may amplify crop problems, underscoring the potential extreme volatility in the soybean market.
Will the 2009-2010 pattern be similar this season for the soybean market? This is what I will be answering for subscribers to my WeatherWealth newsletter.
Frequent trading strategies and long-range weather forecasts are available for multiple commodities.
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.
The El Niño-driven bull markets in cocoa and sugar
Two bull markets in soft commodities have been in cocoa and sugar brought on by a variety of summer weather problems from India to Thailand and West Africa.
My cocoa Spider, featured in my WeatherWealth newsletter for about 8 commodities each week, has been basically bullish cocoa since summer. Sometimes it has gone neutral, but overall, we have developed long-term bullish call option spread ideas for summer.
Wet November weather could further compromise cocoa and sugar crops
This time of the year, dry weather is needed for the sugarcane harvest in Thailand (the #3 producer) and in the Ivory Coast and Ghana (top cocoa producers) where the incessant wet weather has caused disease issues all year.
Usually, El Niño can bring wet weather for Thailand in November but typically it dries out in West Africa for the remaining main crop harvest. One such El Niño year that was super wet in Thailand was 1987. The fact that West Africa has remained wet is atypical of El Niño and more so due to warming oceans and Climate Change.
Wet weather in Thailand during November can negatively impact the sugar crop for a few key reasons:
Flooding – Heavy November rains in Thailand bring a higher risk of flooding, which damages sugarcane fields and disrupts harvesting.
Cloud cover – Increased cloud cover and reduced sunlight slows sugarcane growth during this critical time before the harvest. Photosynthesis is diminished.
Disease – Wet conditions promote fungal diseases like red rot, which damages stems and leads to sugar content loss.
Delayed harvest – Excess soil moisture makes it harder to operate harvesting equipment on muddy fields. This can delay crop collection.
Diluted sucrose – High rainfall right before harvest dilutes the sucrose concentration in stalks, reducing sugar content.
Crop loss – Severe floods from monsoons can completely submerge and destroy portions of the sugarcane crop.
Overall, wetter than normal November weather reduces both the quantity and quality of sugarcane yields in Thailand. Dry conditions are needed for optimal sucrose development and timely harvest. Excessive rain has a very detrimental impact on both yields and sugar content for the Thai sugar industry in the critical pre-harvest period.
While adequate rainfall is crucial for cocoa production in Ivory Coast and Ghana, excessive wet weather over months can cause major issues:
Prolonged heavy rains increase the prevalence of fungal diseases like black pod rot and myriads. These have caused severe damage to cocoa crops recently in very wet conditions.
Overly wet soil makes bean harvesting and drying more difficult. This can delay and disrupt cocoa harvest operations.
Persistent moisture also promotes canker and algal bark diseases which damage cocoa tree health and yields.
Flooding from heavy rainfall can rot the roots, asphyxiate trees, and reduce yields.
So while November rains are important for cocoa pod development, too much rainfall over consecutive months promotes crop diseases, hampers harvest logistics, and reduces bean quality.
HELPING YOU MAKE THE BEST INVESTMENT DECISIONS BASED ON THE WEATHER
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