Great rains fell over drought stricken Iowa this morning. We mentioned this possibility in our newsletter Friday morning. Models did not pick up on the extent of these storms until Saturday. However, the general set up showed a strong potential for ample rainfall. Models forecasted weak westerly flow aloft, a low level jet, and strong low level southwesterly winds a high dew points. This led to deep thunderstorms with a Lifted Index of -6.3 and a Total Totals Index value of 59.
The rainfall over the past two days should improve drought conditions in parts of southern Iowa. Notice the 2″-6″ in the image below. Traders will have to grapple with this news and the fact that PRO FARMER tour will be going on August 21st-24th. The recent beneficial weather may be overshadowed by the realization of damage from previous dry weather.
HERE ARE TWO EXCERPTS FROM OUR CLIMATELLIGENCE WEATHER COMMODITY NEWSLETTER LAST WEEK:
USDA Shocker for Grains
“Several weeks ago, we stated that the Iowa drought would begin to ease later in the summer, and that the easing “would just be a matter of time.” Also, we pointed out that it is rare to get a bull market in corn and soybeans when the weather is cool in the Midwest. With August weather much more favorable and the world awash in beans; furthermore, a couple of weeks ago, we advised subscribing clients to reverse positions and ride the current wave down in soybeans. All eyes will be on the September USDA crop report and whether, or not, the department’s huge crop estimates had been over-estimated. September can often be an up month in grains, so we would not recommend necessarily shorting grains on this current break, although, U.S. weather is bearish for now. We look for important rains in drought stricken Iowa, next week.
SOME RECENT TRADE SUGGESTIONS
So what were some of our other trade suggestions in late mid-late July in Climatelligence? Remember, this is only a FREE newsletter right now, and again not all of our thoughts, trade ideas and viewpoints have been presented.
We recommended selling cocoa put options, thinking that demand and disease issues in west Africa could help prices, and also selling natural gas after potentially bullish EIA numbers in the July 27th report. The gas advice was due to cool weather. However, both of these recommendations were “short-term” in nature and not available in our monthly newsletter. Cocoa prices hit resistance a week or so ago, and we felt that at $2000, prices were high enough. Global production has rebounded and the chances for El Nino have diminished.
Finally, the psychology of the hurricane season and lower production from recent EIA reports could set a floor in natural gas prices. Though we are still awash in shale production; and cool late summer U.S. weather is keeping a cap on prices. Both the crude oil and natural gas market will be watching the Gulf coast or hurricanes this fall. Given the potential for more international tensions and hurricanes, crude oil may have more upside potential.
However, updated daily advice is only reserved for full time daily clients email us for information at subscriptionsbestweather@gmail.com
The Trump Effect May be Over and September is often a Down Month for Stocks
While we try to shy away from strictly talking about stocks (unless they are related somehow to weather and the environment) a word of caution about the stock market. Most of Trump’s promises to his “base” have not come to fruition and while U.S. unemployment is at the lowest level in years. (No credit to Trump, may I remind you, but this was set in motion by the Obama administration years ago.) there may be too many people bullish stocks.
Terrorism is rising, there is political uncertainty in Washington and the chart above shows the history of lower stock prices in September. We still like the stocks NEE and TAN as the world turns more towards solar energy. Remember, NEE has been regarded one of the most ethical companies. In the world for 10 years. Nevertheless, a word of caution that If the stock market sector has a correction, so will these stocks.”
