Recession fears have added to the collapse in commodity prices, but here’s how the weather has also had a negative impact. Nevertheless, some new weather problems in Europe, Australia, and perhaps the western corn belt, later, needs to be monitored.
Notice how commodities such as crude oil, copper, gold, etc. have also sold off due to a stronger dollar and recession fears.
COCOA
Six/Seven years ago, we saw the last major bull market in west Africa on weather problems. Below, you can see the crop stress today vs. 2015-2016. This is one reason why the cocoa market has been under pressure for months: good growing weather in west Africa and a stronger dollar
Now, if anything, it is getting too wet in parts of Ghana where some logistical issues may be occurring for cocoa
NATURAL GAS
In addition to the aftermath of the shut-down of the Freeport natural gas (LNG) export facility in Texas, cooler weather in the eastern U.S. this past week helped to create a bearish EIA number on Thursday. This sent natural gas prices into a tailspin. Big-time heat in the Plains and western Midwest may keep prices from falling a lot further, but it is important to monitor my forecasts.
Will the east turn hot? Will there be an active hurricane season?
GRAINS
After a bullish crop report for soybeans on lower planted acreage, I advised my newsletter subscribers to consider selling way out of the money call options in corn and soybeans on these great rains the next week or so.
Will extreme heat make a comeback and “zap” crops later? Please receive a free 2-week trial to Weather Wealth to find out.
Will this extreme heat later next week be enough to hurt the U.S. corn and soybean crop?
Excellent U.S. harvest weather for wheat, plus much better rainfall and crop prospects in Canada and Russia helped me advise my clients to sell wheat for close to $13 more than a week ago. The ETF (WEAT) has collapsed by some 30% since my recommendation.
Russian spring wheat areas are in pretty good shape but a drought in Europe is reducing crop yields
Click on the video above
COFFEE
While coffee prices have tried to rally on previous dry weather worries in Brazil, tight stocks, and wet weather issues in Colombia, the weather in Vietnam has been ideal and there are no frost scares for Brazil.
Notice the big Vietnam “El Niño-inspired” droughts from 2015-2016 that helped Robusta (instant coffee) prices soar vs. much better conditions today.
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