Gearing Up (with two videos): Climatic factors that will influence spring & summer commodity markets
In this report:
The report below was sent to our paying clients on April 7th. For a two week free trial period please subscribe and you can cancel at any time.
Introduction: My warning in early March about a possible recession vs climatic factors that will influence global commodities in the next few months.
Some of the climatic factors that will affect commodities: Melting glaciers, volcanic eruptions and whether a weak La Niña Modoki remains.
The climatic factors that will impact the grain market the next few months: La Niña Modoki, record flooding in Kentucky strong March polar vortex and the negative PDO index.
Introduction:
Those of you who have been WeatherWealth subscribers know that I rarely talk about the economy or the stock market, but when I do, it pays to listen. As you know, in early March, I became very concerned about a possible recession.
This is what Ronald Reagan said in 1987 about why Trade Wars can hurt the bottom line for famers and consumers and is NEVER a good thing.
Click on the video above
There are 2 other videos for you below.
The first one addresses climatic factors that will influence the globe’s weather and commodities. The second one focuses on the grains.
In my next video (scheduled for April 14th), I will discuss the factors that will impact sugar, coffee, and cocoa. (Available for subscribers only)
Enjoy — Jim
Some of the Climatic factors that will influence global commodities
9 am EDT Monday, April 7
This video covers La Niña Modoki, melting glaciers, climate change, and more, describing how we predict the weather and commodity price action for our clients, sometimes months in advance.
This video was recorded just after my buy recommendation in cocoa on April 1st (no “fooling”). However, on the huge 10-12% rally in less than three days, I advised late last week to take profits or sell cocoa call options against that position, due to the trade war. (See WeatherWealth trade ideas at the bottom of the page)
Click on the video above
The climatic factors that will influence the grain market in the next few months
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WEATHER WEALTH TRADE IDEAS (April 7th)
These spiders are updated each week for paying clients
Natural Gas: One of my best trades the last four weeks, mild spring weather, China’s trade tariffs, and building stocks have resulted in a major collapse in prices.
Recommended taking big profits last Friday on my special update in the inverse ETF (KOLD) (possibly 20-40% profits) from my bearish recommendation in early March.
In addition, with natural gas prices over $4.60, I advised buying the May $4.40 put. Then, when prices collapsed in warmer weather close to $4.00 to sell the May $3.70 put to lock in profits. That spread expires in the next couple of weeks and is up over $3,000 a contract. Let’s take profits and walk away for now.
No new advice for now: took or taking nice profits short natural gas the last month. However, I remain cautiously bearish.
Source:QST
Cocoa: Demand and trade tariff issues vs possible squeeze in the nearby contract as small mid-crop hits the market the next month or so
On April 1st I recommended for aggressive traders to buy July cocoa and prices soared 10-12% in three days before the recent tariff-based sell-off. My reason for the buy was a poor mid-crop hitting the market that should help there be a squeeze.
Notice, for example, how early morning on April 7th the May contract has been the leader with deferred lagging. Since then, cocoa prices have collapsed on demand concerns.
Then, late last week I advised taking $5,000-$9,000/contract profit in just two trading days or selling the July $10,000 cocoa call against long positions and putting a $8,300 stop long July. That call option was traded last Thursday when I advised this at 600+ points ($6,000) contract.
This is a wild market. If you did not take profits last week and instead have been long July futures, (only if you sold the July $10,000 call against it last week), I recommended, as well, risking a stop to $8,300. This may seem confusing, but as of this writing, the short call option is now worth about $2,500 a contract, so you walk away without a loss “no matter what” on both positions and are out of the market.
My advice above on April 2nd
I still see a potential squeeze in the nearby contract, but demand issues and how global weather will fare (see my video above about soft commodities) complicate a longer-term view. Stay tuned.
For now, my bias is cautiously friendly towards cocoa.
Coffee: As mentioned a week ago, “the market knows about Brazil’s terrible crop” and the potential big recovery in production by 2026.
Unless I see a freeze in Brazil, or crop problems for the 2026 crop, later this year, I remain bearish longer term on a rebound in 2026 production and too big a net long spec position.
My March 31st report suggested selling the December $4.50 call option (with coffee prices soaring again). If you did this, you would likely be filled between 18-20¢ (a potential $5,000-$7,000 profit). As of this writing, the trade is ahead about $1,300-$2,100 per contract.
While my Weather Spider is bearish in coffee long-term, heavy rains deeper into April could disrupt northern Brazil (ROBUSTA – CONOLIN) harvest grown further north. This may (??) in a week or two cause some concern in the Robusta market.
Corn: Generally good early season planting weather in the Midwest should keep new corn prices from rallying very far
I have been cautiously bearish corn since late February and prices have collapsed more than 10-15%. Early-season Midwest planting weather and conditions should be generally good. My video on grains (above) addresses potential summer weather problems.
I am neither “getting married” to this yet nor making bold, sensationalistic statements. For now, my bias remains bearish towards the new crop December corn on rallies.
Corn has been rallying a bit on lower stocks. However, unless the Midwest has planting problems, I am cautiously bearish new crop corn on further rallies.
Soybeans: Concerns about trade tariffs and a big South American crop keep the longer-term trend bearish
Until we get into the spring and summer, I have no new advice given outside markets and tariffs. My video above about grains does portend some potential summer weather problems, but this is not a factor now. Stay tuned.
Wheat: Prices hit near support as some global crop concerns help stop the bleeding (for now). But I see Plains drought easing deeper this spring.
Warming at Nino12 off the coast of Peru (see grain video) suggests some improvement, deeper into April and May for drought-stricken U.S. Plains wheat. While the BestWeather Spider is neutral wheat (+2) it could become more bearish if my forecast is right for more important Plains rains, later in April.
In addition, many Russian grain areas are getting rains. For these reasons and Trade Tariffs, I advised two weeks ago that my confidence was not as high being long; (especially when other agricultural advisory firms started putting out crazy statements of potentially one of the biggest bull markets of the decade.
Currently, my overall bias is that with time, more rains then models are suggesting will hit key Kansas-Texas regions deeper in April and May. Even though there is a big short position in the market, my weather spider has become more bearish. I suggest farmers hedge some of their 2025 wheat crop and looking to sell the market likely soon.
Sugar: Weather will become more important after May and June
Further declines in crude prices and a previous rally on reduced global crops make me reluctant to recommend a buy at these levels. I was bullish two months ago and have no advice until we get into the growing season for the crops in Thailand and India when the weather becomes more important.
Right now, I have a bearish longer-term view in sugar due to weak sugar prices and a potential rebound in global sugar production this year with a weak La Niña Modoki.
On April 14th, I will have a video for subscribers about the climatic variables that should influence soft commodities and South American coffee weather between May and September.
