1) What is the Western Pacific Warm Pool and why it has delayed La Niña
2) How the 2022 Tonga volcanoes may have contributed to the western Pacific warming
3) How our computer program www.climatepredict.com forecasted a warm autumn that has pressured natural gas prices
(available to subscribers to our newsletter WeatherWealth)
4) An historical look at why natural gas prices have fallen in four out of the last five consecutive autumn-to-early-winter periods.
Given the record warm oceans and Gulf of Mexico, a tropical storm or hurricane is not out of the realm of possibilities for November 7th-8th.
Sign up for a two-week free trial period to WeatherWealth and you can see our recent trading strategies for coffee, sugar, grains, and more and how to potentially trade these markets in the future.
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.
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.
The headlines of our WeatherWealth newsletter (earlier this week) show what was covered in a detailed article. It discusses weather forecasting techniques and trading ideas for many commodities affected by the recent drought. You can go down to the bottom of this report and receive this entire free issue.
Over the past four years, we have been helping farmers, commodity traders, and ETF investors get a big “jump” on markets from soybeans to coffee natural gas, and many other markets. Second-guessing the standard (= FREE) weather models that everyone and their dog look at, is our specialty, as well as developing trading strategies with our 80 years of combined experience, and analysis of trading psychology of weather-driven markets.
For example, here was our advice (“Spider” from this past July) to clients who potentially made at least $1.00/bushel, by being short soybeans (and 50¢ cents in corn), on bogus weather forecasts by other firms for a drought in the Midwest.
Every few months, we offer Barcharts readers one FREE issue.
BestWeather Spider from previous WEATHERWEALTH NEWSLETTER this past summer
Currently, we have been watching Brazil’s weather very closely for clients. Notice the extreme dryness that previously helped coffee, sugar, and soybeans rally. A week ago, we began forecasting a potential “major change” in the South American weather pattern beginning next week.
Different flavors of La Niña have varying effects on South American summer weather.
Deforestation and the recent El Niño have also been a factor. One can see from my weather program below how weak vs strong La Niña events affect South American weather in October. The change in rain forecasts I began seeing for Brazil a week ago has resulted in the top of the coffee market and will also affect soybean, sugar, and OJ trading in the weeks ahead.
Russia Declares Disaster for Several Key Wheat-Producing Areas Due to Drought
Severe drought conditions in Russia in the last few months have helped wheat prices rally off their lows. What Russia does with exports and the global demand situation will be just as important as rainfall patterns both for Australian and U.S. Plains wheat in the coming months.
In the meantime, the NAO index (blocks over Greenland) has been the most positive on record this summer. This helped to bring the heat and dryness to parts of eastern Europe and western Russia.
My in in-house weather program, below, illustrates how the NAO index will go negative into the first half of October. This should bring some temporary relief from the extreme drought conditions in western Russia and may (or, may not) have some impact on the wheat market.
ClimatePredict is available for free to any WeatherWealth subscriber and covers all ag markets around the world and natural gas, as well.
So… what other weather forecast techniques are we using to predict crop prospects for South American corn and soybeans, potential globalweather problems for wheat and also trading ideas for coffee, sugar, and more?
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.
“The record summer +NAO index and its impact on the weak hurricane season and commodities”
by Jim Roemer – Meteorologist – Commodity Trading Advisor – Principal, Best Weather Inc. & Climate Predict – Publisher, Weather Wealth Newsletter
Weekend Report – September 6-8, 2024
Background of the NAO index and its potential i& influence on the Atlantic hurricane season
The NAO (North Atlantic Oscillation Index) is one of the most important teleconnections to predict winter weather for the natural gas market. It has to do with how surface pressures fare over Greenland and the Azores to the west of Africa. When the NAO is negative in winter, this means high pressure over Greenland that can sometimes bring onslaughts of cold winter weather to Europe and/or the U.S.
However, the positive NAO index also helped us predict record midwest summer grain crops for corn and soybeans and will have implications for soft commodities in the months ahead.The record-warm Arctic combined with mostly a positive NAO index (low pressure off Greenland and high pressure over the Azores) has resulted in several warm winters in a row.
A trader could have sold natural gas at some point in time in November or December in each of the last three to four years and made 30-50% on his/her money by March.
Anyway, the NAO index also has some influence on U.S. summer grain weather and soft commodities, as well as repercussions for the Atlantic hurricane season. Models have been overzealous, forecasting potential hurricanes due to all this African dust you see in the image below.
Nevertheless, storms that “originate” in the Gulf are often not affected by African dust–just waves coming off the coast of West Africa. Near record warm ocean temps could result in rapid intensification of a tropical storm early this week in the Gulf. However, no immediate major hurricane is expected.
Shown below are four graphic images I put together:
(upper left) A negative NAO indexresults in below-average African dust and often an active Atlantic hurricane season when an “El Niño neutral” or La Niña is present.
(lower left) The NAO indexhas hit arecord high this summer at 3.15
(upper right) The correlation of a +NAO (shown on my weather forecast program ClimatePredict) depicts thattotal Atlantic Cyclone Energy and the number of strong storms are below normal. This is in contrast to NOAA as well as many other entities out there who wrongly predicted a few months ago, one of the strongest hurricane seasons on record.
(lower right) Low pressure over Greenland responsible for the +NAO
How can the NAO index give clues about commodity weather?
Take a look at the correlation for September rainfall over northern Brazil when the NAO is positive. There is a negative correlation with rainfall. This implies the severe drought continuing for key Brazilian sugar cane crops, coffee, and orange production areas. OJ prices are making all-time highs on the combination of Florida’s lowest crop in decades, and also a 25% reduction in Brazil’s 2024 crop. The 2025 crop may see more of the same.
Soybean traders will also be watching Brazil’s planting weather in another few weeks or so. A severe drought is unusual if La Niña forms in northern Brazil, but deforestation of the Amazon is offsetting some standard climatological signals.
Of course, the NAO is only one of many teleconnections. See how my program has 28 of them. These helped me “second guess” standard computer models last June in predicting that La Niña would not form this summer and the Midwest would have huge corn and soybean crops.
What is my forecast for the important October coffee bloom in Brazil?
When, if at all, will the sugar market begin to respond to the drought?
Which trading strategies am I employing in futures or options for WeatherWealth clients?
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
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.
“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”
HELPING YOU MAKE THE BEST INVESTMENT DECISIONS BASED ON THE WEATHER
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