Weather Pattern Change Pressures Natural Gas. What About Soybeans?
Traders watching Argentina weather closely for soybeans
The occasional sell-off in soybeans the last few weeks has been due mostly to favorable weather in South America. While good rains are seen on the 11-15 day for most areas of Argentina, soybean prices are rallying for the following reasons:
1) WASDE estimates the Brazil soybean crop at 108 MMT and Argentina at 57 MMT. However, the Brazil figure is probably higher than this and Argentina a bit lower. The combined total soybean harvest of 166-167 MMT is below last year. Still a good, decent crop, but worrying some of “tighter supplies later.”
2) Global demand for soybeans is strong.
3) 100 degree F heat in Argentina off and on the next 10 days is causing crop stress. Forecast for needed rainfall is still in the 11-15 day. If we had heavy widespread rains right now and no hot weather, soybeans would not be rallying.
What’s our forecast or soybean prices ahead? Subscribe to our service. For more information email us at subscriptionsbestweather@gmail.com
Major pattern change pressures natural gas
So much for the bitter cold weather helping the energy markets. On Tuesday, we began forecasting major changes in the pattern for the 2nd half of January ahead of all other forecasters.
Even with three weeks of brutally cold weather, Donald Trump and other global warming non-believers, cannot make statements that climate change does not exist just because it is cold occasionally. This is ludicrous. 2017 will go down as the warmest ever on the planet and Europe, Asia and much of the world have been witnessing warm weather.
The NY Times says it best here: https://www.nytimes.com/2017/12/28/climate/trump-tweet-global-warming.html
The November 30th Delaware Earthquake – was the coming SUPERMOON the culprit?
“THIS IS WILD!” (USGS says of Dover 4.1 earthquake)
http://www.delawareonline.com/story/news/local/2017/11/30/earthquake-strikes-kent-county-thursday/911208001/
It was the strongest quake ever measured for the state of Delaware. Is it possible that the Super Moon* (expected three days later on Dec. 3rd) was, in some way, a catalyst?
* The technical name is the perigee syzygy of the Earth–Moon–Sun system
Image from space.com – Nov. 29, 2017 – “When and How to See 2017’s Super Moon”
A dozen years ago (5/23/2005), National Geographic stated some statistics and then asked a rhetorical question: The moon’s orbit is inclined in relation to the Earth, causing the moon’s position in the sky to nod north and south on an 18.6-year cycle. Is the observed correlation between the moon’s position in its 18.6-year cycle (or any other lunar phase) and earthquake activity a coincidence or something more?
Let’s toss this question into the search engine and see what sticks to the wall…
The Washington Post – September 16, 2016
“Major earthquakes might be caused by the moon”
The Atlantic – September 12, 2016
“More Evidence that the Moon Contributes to Earthquakes”
Science Alert – July 19, 2016
“The Sun and Moon are linked to earthquakes along the San Andreas Fault”
Scientific American – April 29, 2015
“Can Astronomical Tidal Forces Trigger Earthquakes?”
On the other side of the coin, a continued search using slightly different wording spits out these hits:
Fairfax Media (NZ) – November 14, 2016
“There’s No Evidence that Moon Causes Quakes”
Snopes.com – November 8, 2016
“Earthquake-Supermoon Connection Was Called FALSE”
Wired.com – September 25, 2015
“It’s Official; the Supermoon Won’t Set Off Earthquakes”
Universe Today – March 11, 2011
“Just to be clear: The Moon did NOT cause the earthquake in Japan”
Image from earthsky.org – November 3, 2011
Well, the way I look at this … it ain’t the lunar phase that matters, it’s the perigee… just sayin’
Scott Mathews
FOLLOW UP POSTSCRIPT:
On 12/3/17 there was a magnitude 6.0 earthquake in Ecuador
12/5/17 two 4.2 quakes – one in Oklahoma and one in Alaska
Scott Mathews is one of our guest bloggers. He is the Director of Alternative Investments at The Dow Corporation.
HURRICANE IRMA—POSSIBLE IMPACTS AND LUMBER MARKET
Hurricanes and the Lumber Market
We talked about the impact Harvey would have on cotton in last week’s blog. A hurricane/commodity relationship that we haven’t previously mentioned is the lumber market. Prior to a landfall, businesses and homes board their windows to limit damage. After a storm leaves, construction crews need lumber to replace and rebuild. Both of these events can increase the demand for lumber. Futures prices have increased 5% from recent lows just before Hurricane Harvey made landfall. With powerful Irma heading towards the Bahamas and likely the U.S., lumber traders will be watching any and all changes in the track.
Irma Forecast
Irma is currently a powerhouse of a hurricane, with 929mb minimum pressure and 175 mph as of the 8AM EST advisory. The latest forecast from the National Hurricane Center has the center of the storm just south of Florida with 150 mph winds! Unless the elevated terrain of Hispaniola or Cuba disrupts Irma, the strength of the winds should not diminish too much. A landfall like this forecast will be truly historic. Only two other storms in the past 40 years have made landfall with winds at or greater than 150 mph: Charlie (2004) and Andrew (1992).
The big uncertainty is not the strength but the track of Irma. Models have begun to converge and a Florida landfall is likely. But the timing of the curve will determine where and when. Irma, at some point, will switch from heading NW to due North. The most likely scenario is a preliminary landfall in the Florida Keys and a secondary landfall near the Naples/Ft. Myers area late Sunday. However, only a slight shift in the track could lead to a landfall anywhere from West Palm Beach to Tampa, FL and northward (a track into the Gulf unlikely but still possible, unfortunately). More importantly, Irma is large and will have impacts far beyond just the landfall location –>The hurricane-strength wind swath is currently 80 miles wide, whereas Florida is only 160 miles at its widest. Anyone living in Florida, the Bahamas, etc., should continue to monitor the NHC forecasts here.
SOURCE: Tropical Tidbits
We here at Best Weather Inc. will watch Irma intently, as we are headquartered in the west coast of Florida. Luckily there is plenty of time to prepare, as we are still 5 days from Irma’s impacts. The track matches the “Labor Day” hurricane of 1935. Ominously, this storm still holds the record for highest winds at U.S. landfall: 185 mph.
1935 Labor Day Hurricane
For those who are subscribed to our newsletter, and did not receive one last Friday, please email subscriptionsbestweather@gmail.com.We also announced that we will soon have paid subscription service.
Cocoa Prices Soar on Demand and Too Wet in West Africa
After a bottom in early July, cocoa prices have relentlessly pushed higher into the end of the month. Several factors contributed to this rise. As we mentioned in an earlier blog, parts of the Ivory Coast have received too much rainfall. The image below indicates the percent of normal rainfall that has occured for July. Notice the bullseye near San Pedro, IC (200%-400%, arrow). Too much rain can limit the output of the cocoa crop. Floods destroy flowers and small pods during the first stages of development. Another worry is that the beans will rot if humidity levels remain high. Lately, crop areas in Nigeria have also received too much rain, leading to concerns of fungi spreading.
One potential source of the enhanced rainfall is the currently very warm Tropical South Atlantic (TSA) index. This sea surface temperature area helps feed moisture into the West African region during the wet season. Another cause could be the weakening of El Nino, preventing the typical lower rainfall in the late summer and fall in El Nino years.
Higher Demand in Cocoa
With cocoa prices at 5 year lows during the last quarter, Hershey’s was able to capitalize. They recently had a 39% quarterly profit rise. This (and the European Cocoa Association report of 2.1% increase in 2nd quarter grindings from last year) has supported prices throughout July by indicating increased demand.
Poor Demand for OJ vs Florida Citrus Canker. What Else Influences OJ Prices?
Last year at this time, frozen OJ futures were at the beginning of a 7-month rally. Global production had continued to declined since citrus greening and citrus canker have been ravaging crops in Brazil and Florida. The only way to treat infected trees is to remove them and others within a 1 mile radius. Therefore, global acreage has dropped. Hurricane Matthew and Hermine also provided a speculative boost in prices last year, due to worries of storm damage.
OJ Price Reversal
Now it appears that the nonexistent demand is the dominating feature in the market. Orange juice consumption has decreased in 14 of the last 15 years. Other beverages have taken orange juice’s place in American homes. This is similar to the decline in soda consumption, as people stray from sugary drinks.
Moving Forward
Rainfall in Florida over the next couple months is very important. Drought conditions are currently present. See the drought monitor below: If an El Nino develops, this typically leads to above normal rainfall. Most models forecast continued Nino 3.4 warming. Crop damage by hurricanes are always a concern for the summer and fall. But El Nino conditions cause increased shear, that shred tropical systems and hinder hurricane formation. A significant drought or damage from hurricanes would be necessary to really shake the market from its current low demand/low supply see saw.