Given the fact that increased OPEC oil production, additional Russian military threats in the Ukraine and the Trade War chess game have been impacting grain, cotton and oil markets for months, natural gas prices have been subjected almost entirely to U.S. weather. It remains to be seen if the Trade War truce gambit will actually play out. I have my doubts. Check out this interesting article, here
For the soybean market, South American weather will have a big influence on prices in the coming months.
Our Climatelligence Newsletter will alert subscribers to the potential next big move in soybean, cotton and natural gas prices in the coming months. Will El Nino form? Stay tuned, we are playing El Nino down. We are still expecting a potential cold winter that will have big effects on several commodities
COTTON PRICES CONTINUE TO RALLY IN PART DUE TO MORE WEATHER PROBLEMS
Out of all the agricultural commodities, it has been cotton that we have been most concerned about and in which we have had a bullish bias due to a lower of global crops. However, I have my doubts whether the Trade War concerns will really be resolved. This will keep more volatility in the agricultural markets for months.
WHAT HAPPENED TO OUR COLD WINTER OUTLOOK FOR U.S. ENERGY AREAS?
Our initial winter forecast for the U.S. (made back in October) was for a cold winter overall and in fact, November was one of the coldest in recent memories helping to create a spiral, but volatile, upward move in natural gas prices during November. A short term warming trend is expected for mid to late December across some key U.S. energy areas, but does this change our longer term view about a cold winter? Probably not.
The cold November (above–blue), helped to send natural gas prices soaring some 25% until early this week.
However, last week, we began alerting full time clients of a short term change in U.S. weather towards “warmer” as we head deeper into December. This was due to a change in what we call the EPO index, that will go from negative to positive in the coming weeks. The EPO (Eastern Pacific Oscillation index) has to do with the jet-stream close to Alaska which can have a huge impact on North American weather and off-set other cold signals. However, most of our research suggests any major warming will be short-lived.