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.
This article contains syndicated content. We have not reviewed, approved, or endorsed the content, and may receive compensation for placement of the content on this site. For more information please view the Barchart Disclosure Policy here.
Below are excerpts from my recent WeatherWealth newsletter. Many agricultural commodities are breaking out to the upside and the weather is definitely a key reason. In contrast, warmer U.S. weather returning and worries over a potential increase in domestic oil production, combined with trade tariff concerns have pressured energy markets again.
The new bull market in many agricultural commodities could add to inflation worries once again
It was these wilting trees in 2024 that have now resulted in recent crop survey tours with many analysts lowering their 2025-2026 Brazilian crop by another 5-10%.
Improved October rainfall kept the situation from being even more of a disaster. Nevertheless, coffee stocks continue to fall and the charts are very bullish.
In addition, a stronger Brazilian Real results in farmers holding back on sales of commodities such as coffee, soybeans and sugar.
Going forward, the big question for the coffee market is “How will a weak La Niña event (or neutral situation) affect production in Vietnam, Colombia and Brazil, deeper into 2025-2026?” I will have studies later on. of course.
Nevertheless, due to Theta (time decay) for certain coffee option strike prices, we suggested call option strategies that were potentially profitable for those WeatherWealth clients who took our advice two months ago.
Why cocoa prices have higher to go, even at these historical levels
One of our most successful recent trade suggestions to WeatherWealth clients has been in cocoa. Prices have now soared more than $11,000 a contract in two weeks on growing new concerns for the 2025 West African mid-crop, but also potentially for the main crop. The crop problems never end in West Africa. In my opinion, this is brought on more by climate change than by El Niño or La Niña events.
My in house teleconnection program looks at weather signals thousands of miles away to second guess standard computer models.
Typically with a weak La Niña (negative MEI index), we can see a wet signal for West African cocoa (+3.45).
However, notice that a total of six of the most important climatic variables I look at above (Indian Dipole and record warm ocean temperatures in the Atlantic and near West Africa) are all dry signals (negative values). One combines all of these and we can see that humidity levels and rainfall will remain below normal, thus hurting more of the cocoa crop.
Why, In The Face Of A Bear Market In Sugar, We Reversed Our Attitude
Other than the Brazilian Real breaking out technically that can often help sugar and coffee prices, new weather problems in Australia from harvest delays and a lower crop in Thailand, as well as in India, helped sugar prices rally 10% off their lows.
We caught wind of this around January 21st and advised subscribers to our WeatherWealth newsletter that I was no longer bearish and to look for potential buying opportunities.
Is it too late to buy sugar now. Is this old news? That’s where our newsletter comes in handy for many markets. We also issue “Weather Spiders” each week for all markets.
Sources: A Real Sugar Expert & WeatherWealth Newsletter
Learn how to trade commodities successfully based on weather, the commitment of traders, technical analysis and other signals. Join farmers, traders, agribusinesses, natural gas producers and ETF enthusiasts around the world who want to benefit from more accurate weather information and timely trading strategies.
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.
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.
Extreme heat in much of the deep south and west is beginning to create a new bull market in natural gas, but what about corn and soybeans? Right now, my biggest concern is for flooding in the NW corn belt that may mean a switch from some corn to soybean acreage. The potential also exists for some heat heading into July.
Back in April, our forecast for drought-easing Midwest rains, combined with terrible demand, helped pressure grains sharply. This collapse may be surprising in the face of lower and lower Russian wheat crop yields and damaged South American corn and soybean production. However, it will take consistent heat and dryness later to foster a new bull market in corn and soybeans.
Could this happen? Perhaps. In my view, occasional weak El Niño conditions are holding on. I predict a hot July for parts of the Midwest corn belt based on what I’m seeing about the global climate, as per the maps below. The key factors are record flood levels coming to Florida combined with a warm signal from a NINO4 and a negative PDO.
1) Solar Activity:
My point of view : T h e r e is z e r o c o r r e l a t i o n b e t w e e n s u n s p o t c y c l e s a n d gl o b a l w e a t h e r.
Perhaps, 50-100 years ago that might have been the case… but not today, with record global ocean warming brought on by man-made influences. Do you think that all of these record-warm years are cyclical and due to the sun? Guess again… NO! The chart below shows how the planet has warmed since the 1880s whether solar activity (yellow line) was high or low.
2) Similar teleconnections and a look at July rainfall trends
The negative PDO in the Pacific, along with warming and an El Niño signal east of Australia (NINO4 region), combined with cooling near Peru (La Niña signal) has only happened simultaneously in two years since 1950. Depending on how these teleconnections fluctuate in the next few weeks, may result in a dry July in parts of the corn belt and take the bearishness out of the grain market.
3) Signs El Niño/La Niña conditions are going back and forth
Volatile global weather patterns have N O T H I N G to do with solar cycles but everything to do with record-warm global oceans and the oscillation of El Niño/La Niña among other teleconnections.
My program is available for all WeatherWealth subscribers. The purpose is to apply weather forecasts to predictions about market trends for agricultural and energy commodities.
Shown below are the incredible rains that hit Florida: more typical of El Niño lingering than La Niña
Will we enter a new bull market in corn and soybeans? For natural gas, we became bullish last week. Please feel free to download a recent complimentary sample issue of our newsletter here, or join farmers and traders around the world who want a much better edge trading commodities on the weather, with a 2-week free trial to WeatherWealth
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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