The first effects of a developing El Niño: Drought breaking in Texas and the deep south, with flooding in some areas
Various teleconnections can affect the strength and size of El Niño
A general view of El Niño and commodity market impacts
Recent Trade Ideas
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Video about El Niño
This video does not give any specific trade ideas, but discusses how El Niño forms and why some forecasters are predicting a ” Super El Niño.”
The verdict is still out, however, and I will be doing research on this in the coming weeks and months.
The effects of lower crude oil prices and a potential end to the Iran War will greatly affect commodity prices early this week. The stock market made new highs. However, Iran has not agreed 100% to a deal.
CLICK ON MY VIDEO ABOVE
The first effects of a developing El Nino? Flooding rains and drought breaking in the deep southern U.S.
U.S. cotton drought to break
I mentioned some 400 points higher than this, that I was bearish on cotton as I saw the drought ease for key Texas and Delta cotton growing areas. This is typical of a developing El Niño. However, I am not sure of some flooding in the deep south could eventually rally cotton prices back, as well as strong demand. Otherwise, we had a clear break below support last week prior to my spider going bearish.
I mentioned this a week ago and cotton prices have collapsed
Flooding in the deep south may interfere with the early wheat harvest and some soybean planting
Notice rainfall this week could exceed 3-5″ in the deep south, including Texas. While seasonally, wheat prices go lower into harvest and much of the severe Plains (post-La Nina) drought may have been factored into wheat prices, these heavy rains might cause wheat prices to rally at some point.
In other words, some potential early wheat harvesting concerns and quality problems from too much rain in some areas. The wheat market is a bit confusing because global crop weather in Europe, Australia, and Russia is generally improving.
Rainfall in inches this week: Typical of a developing El Niño and too late to help the Plains wheat crop. This rain could cause some pre-harvest concerns for wheat in the Deep South and prevent prices from falling much further.
Improving the weather for Australian grain areas for planting
Look how models changed for very important rains for key Australian grain areas this week and possibly as we head deeper into June. I mentioned this two weeks ago. A weak El Niño this time of the year with a positive Indian Dipole usually brings better late May and June rainfall patterns for Australia. However, a strong El Niño later this year will likely cause some problems
Various teleconnections can affect the strength and size of El Niño
While Greek to many of you, it is not just Sea Surface Temperatures in the Pacific that influence El Niño, but some of these teleconnections. I will discuss this more in the days and weeks ahead.
Right now, by the North American summer, a moderate El Niño is likely, in my opinion. Will it be “Super” by the fall? Stay tuned
A general view of El Niño and commodity market impacts
You can print the table I created below.
This table is not set in stone. However, I pride myself on being able to “second-guess weather models and understand the psychology of commodity trading.”
Currently, I am trying to gauge the psychology of traders focusing on El Niño versus current global crop conditions.
For example, while there are no immediate major problems for sugar production areas, sugar prices have rallied 5-10% the last few weeks on a “what if ” situation of El Niño and the rally in crude oil prices. I would expect that sugar prices may slide a bit, given lower crude prices currently, until more is known about the 2026-27 crops.
Another example is cocoa. Three weeks ago, I put out a buy recommendation in cocoa based on the “psychology” of El Niño coming. My timing was perfect as we rallied 20% in less than a week. Near the highs around $4500, I immediately said, “Take profits if you were long.” The reason, late May and June weather conditions are improving for West Africa. I do not know how low prices may go as we had a heck of a sell-off, but I want to see “actual” weather problems develop for West African cocoa crops before recommending any new high-confidence buy. It is possible that heavy rains in West Africa may be too much of a good thing and cause some crop concerns. I am cautiously bullish again cocoa longer term.
Screenshot
If El Niño becomes strong by July, ideal pollinating weather for corn will ensue and new crop December corn will fall below $4.00. Right now, the U.S. corn crop is in pretty good condition, and I will be monitoring dryness in the far north and western belt. If El Niño is weak to moderate, some potential Midwest heat and dryness could develop later in June and July. Stay tuned.
La Niña events usually create the greatest bull markets in wheat, but there are exceptions. Several strong El Niño events created major global crop problems in Australia, Argentina and China. For now, while wheat prices are falling on less Iran war tensions and harvest pressure coming up, some dryness and heat in Western Europe, combined with too much rain in the deep southern U.S. is typical of a developing El Niño. Some (not all) El Niño events can bring too much rain for the U.S. wheat harvest. The result may still be sideways, confusing action for the wheat market for now. I would not press the short side of the wheat market on the recent 20-30¢ sell off.
There has been talk about lower Brazilian coffee production and El Niño. However, this would NOT be until later this year. A strong El Niño would end the bear market I predicted in coffee from last August to October. Coffee prices have fallen 30% since my bearish recommendations.
There is chatter that the Vietnam coffee crop is being hurt by dry weather–often a sign of El Niño. However, I think it is too early to write off the Vietnamese coffee crop. Usually, El Niño has to be strong to greatly reduce the Vietnam crop. That may not happen till later on this year.
My main concern about the global coffee market is a lower Colombian crop. Usually, this time of the year, El Niño reduces potential crop problems for Colombia cofffee. However, that is not happening. It may be too wet. Hence, I am confused for the moment what to think about the coffee market and had clients take more nice profits again early last week in short positions (mostly long put options or short call options for months).
Our video below addresses three very important climatic teleconnections that may worsen the U.S. wheat crop in the weeks ahead. April and May are critical times for wheat crops in Europe, Ukraine, and most of the U.S.
The key teleconnections that help us develop ETF, futures and option strategies for clients are: 1) A weakened La Niña; B) Lingering negative global atmospheric angular momentum (GLAAM) that can sometimes result in dryness for parts of the Midwest or the Plains; C) A major warm block (-WPO index) in northwestern Alaska that can bring occasional cold snaps to either the U.S. and/or Russia that could threaten wheat yields.
Source: Pearson Education
Global Atmospheric Angular Momentum (GLAAM) is a measure of the total rotation of the atmosphere relative to the Earth. When this index is negative, it indicates that the atmosphere is rotating more slowly (ice dancer on the left) than the Earth’s surface, typically resulting in easterly wind anomalies.
In the spring, a negative GLAAM phase often leads to dryness in the U.S. Great Plains wheat areas. The key point here is that even though La Niña has “officially” weakened to neutral, the atmosphere can still occasionally act as if La Niña is present when GLAAM is negative.
See this five minute video (below) that discusses the developing Plains drought and which factors we are watching.
Source: Jim Roemer & Google’s NOTEBOOK-LM
Other factors have influenced wheat prices, resulting in major volatility. They are:
The Middle East war and logistical issues in transporting wheat
The Russian war on Ukraine could lower Ukrainian wheat production
Recent heat stress to crops in India
The stronger U.S. dollar can sometimes hurt grain prices
1)How stratospheric warming helped natural gas prices surge over $5.00 in early December, only to come crashing down on the warmer late month outlook. That warming aloft will begin to weaken.
2)What is a -WPO and -NAO index? It will bring much colder weather to Europe and perhaps New England as we head towards the end of the month, However, since the negative NAO will be more eased based, that would favor Europe seeing more consistent snows into January rather than much of the central and eastern U.S.
3)How a +EPO index (cold pool near Alaska) and strong western U.S. troughs (-PNA) will offset a potential cold January weather pattern for the U.S. This means that most U.S. natural gas areas will be warmer than normal.
4)How strong vs weak La Niña events affect the weather in January
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The BestWeather Spider is considered a reliable tool for commodity traders because it integrates advanced weather forecasting (including factors like El Niño, La Niña, and the Indian Ocean Dipole) with market analysis to anticipate how weather events will impact commodity prices.
Screenshot
Jim Roemer’s approach uses both meteorological data and market fundamentals, providing actionable insights that help traders and farmers make informed decisions in volatile markets.The Spider’s recommendations are regularly updated in the WeatherWealth newsletter, which further enhances its reliability through continuous analysis and expert commentary.
Jim Roemer’s BestWeather Commodity Spider is a proprietary tool that combines weather analysis, technical analysis, and other market fundamentals to help commodity traders anticipate price movements in markets like grains, energy, and soft commodities. The Spider provides actionable insights by showing how weather patterns and forecasts may impact specific commodities, giving both experienced and novice traders an edge in making informed trading decisions. It is part of the broader suite of services offered by Best Weather Inc., which includes newsletters and reports with trade recommendations based on meteorological data and market analysis.
Jim Roemer’s BestWeather Commodity Spider predicts market moves by integrating several key factors:
Weather analysis: It assesses global weather patterns—such as El Niño, La Niña, droughts, and temperature anomalies—that can impact crop yields and energy demand
Technical analysis: The Spider incorporates chart patterns and market signals to identify trends or reversals in commodity prices.
Market fundamentals: It evaluates supply and demand factors, currency movements, and geopolitical events that influence commodity markets
Market psychology: The tool interprets trader sentiment and behavioral patterns to anticipate potential market reactions.
By combining these elements, the Spider provides actionable insights and trade ideas for commodities like grains, energy, coffee, and cocoa, helping traders anticipate and respond to market shifts
The Indian Ocean Dipole (IOD) is a climate phenomenon affecting the Indian Ocean. During a positive phase, warmth is pushed to the Western part of that body of water, while cold deep waters are brought up to the surface in the eastern end of the Indian Ocean. This pattern is reversed during the negative phase of the IOD. It is also known as the Indian Niño, as it draws similarity with the El-Niño Southern Oscillation (ENSO).
What are we looking at?
The plot tracks the conditions in the Indian Ocean, showing the phase of the IOD both now and in the past. Right now we are in a negative phase.
When the value of the time series is positive (red shading), the warm phase of the IOD is present with higher sea level in the western Indian Ocean and lower sea level in the eastern Indian Ocean.
When the value is negative (blue shading on graph above), the cool phase of the IOD is present with lower sea level in the western Indian Ocean and higher sea level in the eastern Indian Ocean. This is what we have today.
Why is it important in commodity trading?
The IOD influences tropical commodities in Africa, Australia and Southeast Asia the most.
During the positive phase of the IOD, the high temperatures along the coast of Africa cause heavy rains and droughts in Australia.
During a negative phase the high temperatures and rainfall patterns are reversed. The sea-level changes associated with the IOD can also lead to increased threats of coastal flooding and associated impacts. However, for west Africa, a negative IOD phase coupled with an El Niño can bring bull markets for cocoa with dry spring and summers often occurring affecting the main crops in Ivory Coast and Ghana.
Presently, we have an El Niño neutral situation and a developing negative Indian Dipole. Hence, the situation is a bit confusing, but could portend a decent (not great) main cocoa crop and possibly take the steam out of the recent two year bull market.
Source: Jim Roemer (Climatepredict software): “If there was an El Niñno in 2025, which there is not, drier weather and a potential bull market would occur this summer“
The negative phase of the IOD brings about the opposite conditions of a positive IOD, with warmer water and greater precipitation in the eastern Indian Ocean, and cooler and drier conditions in the west.
The IOD also affects the strength of monsoons over the Indian subcontinent. This is what we have presently: A negative Indian Ocean Dipole, whose effects should be for a general good monsoon in India that tends to be bearish commodities such as sugar.
The impact of monsoons on Indian farmers
A majority of India’s GDP is dependent on the growth and production of agriculture. India is an agrarian nation, with more than 50% of the population earning their livelihood in agriculture.
The monsoon is the most important season for farmers in this country. A majority of Indian agricultural land is watered by the southwest monsoon. Field crops such as sugar, cotton, wheat, rice, and legumes are staple foods in India. They require strong rainfall in order to grow.
Does the Indian Monsoon affect summer corn belt weather?
There is only a little evidence that the Indian monsoon has a significant or consistent effect on Midwest Corn Belt weather. The Midwest’s weather and crop yields are primarily influenced by local factors such as precipitation recycling, land use, and groundwater, as well as larger-scale patterns like El Niño and La Niña. While global weather systems can sometimes interact, and changes in major monsoon systems may have indirect or minor effects on global atmospheric circulation, any direct linkage between the Indian monsoon and Midwest Corn Belt weather is not established in the search results.
You can see on my ClimatePredict program below (available to subscribers to WeatherWealth newsletter), there is a slight (-.31) correlation of the Indian Dipole and July corn belt rainfall.
In other words, a negative IOD, which is negatively correlated, suggests a slight chance for above normal corn belt rains (two negatives = a positive value). Notice, however, the correlation is much higher with El Niño/La Niña (+1.01). An El Niño (warm ocean signal) is positively correlated with corn belt rain. In other words wet, while La Niña is the opposite– a dry bullish signal like 2011 and 2012. Right now, we have mixed “El Niño neutral” conditions.
July temperature tends to to be hotter than normal for the Midwest corn belt with a negative IOD. Here too, the correlation is much weaker with the IOD than El Niño/La Niña and other teleconnections
Conclusion:
It promises to be another wild summer for the grain market, as the potential for hot summer weather will increase market volatility. The Indian Ocean Dipole being negative and an “El Niño neutral” event does suggest that most (not all) of the Midwest grain belt should have decent summer rains.
With respect to soft commodities, potential crop problems may continue for parts of West African cocoa, while Robusta coffee and sugar crops recover in Southeast Asia. This could keep these two commodities in a more longer term bear market. Of course, the behavior of the Brazilian Real, US dollar and crops in various locations will also play a role.
by Jim Roemer – Meteorologist – Commodity Trading Advisor – Principal, Best Weather Inc. & Climate Predict – Publisher, Weather Wealth Newsletter
Scott Mathews, Editor
Weekend Report – May 9-11, 2025
Source: Screenshot by Climate Predict LLC – superimposed comments and markers by BestWeather – insert of Pacific Walker Circulation image by NOAA
While the grain futures have been mostly in a bear market, even with a weaker dollar, commodities from gold to cocoa and coffee continue in bull trends. Canola prices have really been perking up.
Potentially, there is a global weather problem as the drought in China is beginning to affect some crops in parts of southern Australia.
Below, I discuss how weather and the El Niño neutral stage (neither El Niño or La Niña) is affecting every commodity from wheat to ideal Midwest corn belt weather, previous crop problems in West African cocoa and why global sugar weather is improving. How about natural gas and a possible hot summer?
As a WeatherWealth newsletter subscriber, not only do you receive trading ideas, but you also see much more accurate weather information as we “second guess” standard weather models by looking at these 28 global weather teleconnections for all Ag and natural gas commodities.
—Enjoy Jim Roemer
Source: map by USDA
– commentary and indicator arrows added by BestWeather
Source: price graph by Barchart.com
– indicator arrow and superimposed wording by BestWeather
Source: screenshot by Climate Predict LLC
Source: screenshot by Climate Predict LLC with comments and indicator arrows superimposed by BestWeather
Source: map by Agri-Food Canada (a national information service)
Source: maps by stormvistawxmodels.com – used by permission- superimposed comment and indicator arrow by BestWeather
Source: map by WeatherBELL – used by permission
Sources: three screenshots above by Climate Predict LLC
– superimposed comments and indicator arrows by BestWeather
– antarctic polar projection map insert by NOAA, with superimposed markers by BestWeather
Source: maps by USDA, with indicator arrow superimposed by BestWeather
Source: map by WeatherBELL – used by permission
Source: maps by NOAA with superimposed labels and comments by BestWeather
Source: map by NOAA with superimposed arrow indicator by BestWeather
Sources: seasonality table by MRCI (used by permission), with superimposed elements by BestWeather- Map by stormvistawxmodels.com – used by permission – comments and indicators by BestWeather
Source: BestWeather Spider – royalty free natural gas flair photo by pexels.com
Artwork created via AI software DALL-E 3 and is the property of BestWeather
Thanks for your interest in commodity weather!!!
Mr. Roemer owns Best Weather Inc., offering weather-related blogs for commodity traders and farmers. He also is a co-founder of Climate Predict LLC, 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 commands a unique standing among advisors in the commodity risk management industry.
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