Weather refuses to rescue natural gas and grain traders from the hungry bears

Weather refuses to rescue natural gas and grain traders from the hungry bears

February 15, 2024

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. 

Source:WeatherWealth newsletter at www.bestweatherinc.com
 

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:

Source:WeatherWealth newsletter at www.bestweatherinc.com


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

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How we predicted quite early,  the easing of the Polar Vortex, plus big heat to hit Argentina

How we predicted quite early, the easing of the Polar Vortex, plus big heat to hit Argentina

(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.


Enjoy! Find out more here https://www.bestweatherinc.com/new-membership-options/

(VIDEO) What is causing the extreme cold weather & a look at major snowstorms the next 2 weeks

(VIDEO) What is causing the extreme cold weather & a look at major snowstorms the next 2 weeks

About this video

This video pinpoints the climatic variables responsible for the coldest U.S. weather in years. Frequent snowstorms will also occur. The good news is that some easing of the cold will occur by late January.

Click on my video above

Estimated snowfall (inches) next 2 weeks from two major storms. This, and the extreme cold, is due to the negative NAO and WPO indices.

The climatological factors that will bring huge cold & snow to the U.S. and Europe

The climatological factors that will bring huge cold & snow to the U.S. and Europe

A negative NAO index has to do with a warm block near Greenland.  (please watch my videoit explains how this is affecting commodities)

SNOWFALL PROJECTIONS NEXT 2 WEEKS (INCHES): A negative NAO will bring many areas in red and white over 1-2 feet of snow from at least 2 major storms. The most snowfall in several years

The opposite is happening over the South Pole (Antarctica), there has been a positive AAO index. This means the vortex stays put and does not move north. Combined with El Niño, this has brought improved weather for South American soybeans, something I alerted all my WeatherWealth subscribers about, three weeks ago.


Only 4 or 5 El Niño events have seen a powerful negative NAO index in January. Most of these years saw El Niño weaken by the spring or summer. Based on this scenario, this will be very important for many agricultural markets, and I will be developing trading strategies in options, futures, and ETFs.


 How a negative NAO (warm block over Greenland that forces the Polar Vortex south) affects commodities:

1) Energy/Natural Gas: Coldest weather in at least 2-3 winters coming for Europe and the U.S. starting next week

2) Wheat: Isolated areas of winterkill in Russia and possibly Nebraska and big cold and snows for the southern Plains and Midwest. It will be important to monitor snowfall.

3) Cocoa: While I was bullish all summer and autumn long on major wet weather and disease issues, the lack of a Harmattan Wind in Ivory Coast and Ghana could prevent any further damage to the cocoa crop


How does a positive AAO index (The vortex that remains over Antarctica and does not move north) affect commodities?

1) Soybeans/Corn: Easing of the northern Brazil drought and potential big Argentina crops

2) Coffee: A hot November and early December likely will lower Brazil’s coffee production by several million bags, but improved rainfall is on the horizon that will stop further damage.


Join farmers and traders worldwide who want an advantage in trading agricultural and energy futures with over 100 issues a year of WeatherWealth with frequent weather updates and trading ideas. Download a recent complimentary issue here about El Nino https://www.bestweatherinc.com/new-membership-options/


This free report below was written three weeks ago before we changed the weather forecast for natural gas and energy markets)

(VIDEO): Winter weather forecasting techniques and the collapse in natural gas prices

(VIDEO): Winter weather forecasting techniques and the collapse in natural gas prices

Click on the video above to see how various climatic factors will affect winter weather and the natural gas market.

Discounts are available for small traders and farmers. Find out, how one trade alone, such as being short natural gas in early November pays for my newsletter for two years.

PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS AND THERE IS ALWAYS A RISK OF LOSS IN COMMODITY TRADING.

Monitoring global weather extremes for soybeans, sugar, cocoa, and coffee and a look at climatological factors

Monitoring global weather extremes for soybeans, sugar, cocoa, and coffee and a look at climatological factors

CLICK ABOVE TO WATCH A SPECIAL VIDEO

The video above discusses the weather extremes affecting South America’s soybeans, coffee, and sugar crops.

Will the chances for rain increase in drought-stricken N. Brazil and the floods ever abate in southern Brazil? There could be some important rains (down the road) for northern Brazil, with flooding occurring to the south. So how do you trade coffee and soybeans and what is my longer-term view?

Find out our futures, ETFs, and option strategies in our WeatherWealth newsletter and join farmers and traders around the world who have benefited from the only meteorologist who is—a commodity trading advisor with 38 years of experience.