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.
By Jim Roemer – Meteorologist – Commodity Trading Advisor – Principal, Best Weather Inc. & Climate Predict – Publisher, Weather Wealth Newsletter
MidWeek Report – August 28, 2024
The short answer to whether or not we see a major bull market in natural gas due to a category 4-5 hurricane in the Gulf is NO… At least for now and the next few weeks. However, natural gas prices are likely oversold with U.S. production coming down later on.
Our WeatherWealth newsletter has advised energy traders that huge U.S. supplies, a recent bearish EIA due to cool weather last week, and our prediction that La Niña would be delayed, was NOT a bullish aspect for the natural gas market. At these prices, however, it is a bit too risky to become that aggressive and go short the market. Remember, however, nothing it too cheap or expensive in commodities!
Something is brewing in the tropics, but due to something we call the MJO index, combined with African dust, any major Gulf hurricane is not likely for now.
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Natural gas prices have collapsed more than 30¢ since we suggested, two weeks ago, that prices would not get above the chart line shown above.
What to do now in natural gas? Could we have a major hurricane later this fall? What about winter and how we out-forecast standard weather models that too many people believe?
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 involve a significant risk of loss and is not suitable for everyone. Past performance is not necessarily indicative of future results.
Most recently, since June,we’ve stated our opinion that “fading” ALL computer models that suggested La Niña would form later this summer. In addition, all these summer grain market bulls “completely missed the boat” as our clients were advised about a potential collapse in corn and soybeans, as early as mid June on perfect summer corn belt weather!
How did we do that? First of all … standard GFS and European models are “free to the public.” You get what you pay for: erroneous models which often cannot forecast the weather accurately more than a few days in advance.
My 40-year experience in “second-guessing” computer models and my understanding of market psychology comprise The Key.
We also offer our in-house long-range weather software that all subscribers can access. It is called ClimatePredict (www.climatepredict.com).
It performs analyses of the history and behavior of teleconnections and correlates agricultural commodity crop growing areas, while incorporating:
Arctic Sea Ice (or lack thereof);
Better prediction of El Niño or La Niña;
Ocean temperatures thousands of miles away,
Dozens of other phenomena, etc
Jim Roemer’s initial objective, back in June of $9.50 soybeans (from $11) and sub $4.00 corn, helped farmers hedge their production weeks ago and aided traders in adopting various futures and options strategies. In only a couple of months, one trade alone (just in grains) would have paid for my newsletter for several years.
We are finally seeing the signs of potentially the first weather scare of the summer for some hot-dry weather. Is it time to buy corn and soybeans? Are the markets oversold?
This installment, early last week, discussed the following:
1) Fading computer models all summer, predicting record corn and soybean yields for Midwest grain farmers and the bear market (back in June). Will prices for soybeans reach $9?
2) Best Weather Spiders: How to use them to trade Ag and natural gas commodities
3) Why the next big bull market may be in coffeeas extreme drought remains in Brazil & how recent coffee market volatility based on varying weather forecasts from the recent very light Brazil frost
4) Why our bearish outlook in sugar prices from 21 cents predicting a great Indian Monsoon has now been scaled back
5) Climate Predict: BestWeather’s in-house weather and crop production model for global commodities (free with an annual subscription to WeatherWealth)
6) Trade ideas from grains to soft commodities and natural gas
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.
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
African dust, the Harmattan Wind, and how I called the unprecedented explosion in cocoa prices three weeks ago.
Why El Niño has strengthened recently: Potential impacts for grain prices and the Midwest summer
Why record-warm global oceans have thwarted any bull move in natural gas prices
A look at potential late February and March weather
Join farmers, traders, and investors on six continents who have benefited from a seasoned meteorologist’s 38 years of experience as he second-guesses standard computer models. What is the next big trade in Ag commodities? Is it too late to buy cocoa and go short the grains?
(Our video from last week addresses why we reversed our bullish attitude in natural gas early this past week and enumerates the implications for South American grain weather.) It’s a bit too late to sell natural gas in the hole now, especially with a potential friendly EIA number later this week.
El Niño usually brings big crops to Argentina
It is common knowledge that more than 80% of the time, El Niño brings above the normal corn and soybean yields in Argentina and southern Brazil, but can often bring dryness and reduced crops in northern Brazil. This certainly happened earlier this winter (South American summer) with drought hurting Matto Grosso soybean yields. Nevertheless, we had been in the bearish camp for weeks in soybeans due to worries over the Chinese economy and our earlier forecast that South American weather and crop conditions would improve.
Click on this image In the above video, I cover the following:
A) Why late January and February heat and dryness in Argentina is unusual during El Niño but some problems may develop from excessive heat;
B) How teleconnections such as the MJO and AO index can affect South American corn and soybean weather in February and offset typical ideal “El Niño type” weather (too wet at times for the northern Brazil soybean harvest and some potential minor issues resulting from hot and dry in Argentina);
C) How we warned clients of a top in the natural gas market by predicting a +AO index;
D) How the Red Sea tensions have helped markets such as Robusta coffee and cocoa soar. These two markets already have had tight supplies due to El Niño-related crop problems (Brazil coffee weather will continue to improve vs. some previous crop reduction issues);
E) If February is hot and dry in Argentina, this might suggest that the 1987-88 El Niño analog could hold, suggesting the potential for summer Midwest weather problems affecting corn and soybeans (right now we are not calling for this, but something to watch).
f you have not yet had a complimentary trial to WeatherWealth, please request one, and join farmers, ETF investors, and futures traders on six continents and those who just want better (more accurate) short and long-range weather forecasts, often before markets react. While past performance is not indicative of future results, calling the $1 collapse in soybeans the last 6 weeks and the recent huge weather market natural gas volatility pays for the newsletter for years in just a matter of weeks.
HELPING YOU MAKE THE BEST INVESTMENT DECISIONS BASED ON THE WEATHER
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