HOW TO PLAY THE ENERGY MARKET ON THE NEXT GULF HURRICANE AND THE MOST TRENDING WEATHER MARKETS?
August 26th, 2021
SEE VIDEO ABOUT THE NEXT POTENTIAL GULF HURRICANE AND IMPACTS
IMPROVED RAINFALL OUTLOOK FOR MIDWEST NEXT 2 WEEKS, BUT OTHER FACTORS TOO DRIVING CORN AND BEANS AGAIN
Rains hitting parts of Iowa this morning. There will be a lot more rain over 75% of the corn and soybean belt in the next 10 days or so. There may be some harvest delays for spring wheat. Rains will do little to help the corn crop but will keep the soybean crop stable. Volatile grain trading to continue with no trend
POSSIBLE IMPACTS OF GULF COAST HURRICANE NEXT WEEK?
- Usually a short term bearish impact to the crude complex, while gasoline prices could offset crude.
- A short-term bullish aspect to natural gas prices (probably a buy if we get a break in prices later today but get out after a pop on psychology Monday)
- Potential bullish impacts to cotton in the south
- Potential friendly impacts to coffee as some coffee wear houses in the Gulf may be hit?
The most trending Weather Markets
Oats, spring wheat, sugar, cotton, and cocoa are the most trending markets, while we see coffee, natural gas, grains, and others going back and forth. However, the weather is potentially becoming more bullish again for natural gas and coffee.
I still like long sugar and the ETF (CANE), but would prefer to see more weather problems in Thailand and India, not just Brazil. Also, while I recommended taking profits several times long spring wheat, there are new weather concerns and prices may be supported on breaks. Cotton is both technically and from a weather perspective bullish. Coffee areas may not see enough rain and a hurricane in the Gulf could disrupt some supplies. Finally, while cocoa looks bullish technically, the weather is not bullish, so I do not recommend buying this on the weather
Spring wheat: Long term charts look bullish and global weather problems continue
Droughts in Russia, the Northern Plains, and Canada are a bit old news, but the situation is getting worse in Russia and there may be some harvest delays from too much rain in parts of central Canada and the N. Plains into September
I told clients to once again take profits in spring wheat over the last couple of weeks because of seasonal bearish factors, but the weather is still slightly bullish spring wheat and oats–I just do not like recommending buying rallies
SUGAR: BRAZIL CROP MAY KEEP COMING DOWN AS RAINS MAY STILL NOT BE ENOUGH
What crude oil prices do, the Indian government with their export situation and their crop size, as well as any new crop estimates out of Brazil will influence prices. Sugar has sold off a bit due to the weaker Brazil Real. I would prefer to see other global weather problems, not just in Brazil, but hopefully, sugar prices will hold support.
cotton: FLOODING IN DEEP SOUTH, HURRICANES, LOWER ACREAGE DUE TO DROUGHT OUT WEST TIGHTENING WORLD SUPPLY SITUATION
COCOA: STRONG DEMAND OFFSETTING IMPROVED GLOBAL WEATHER
The weather is not bullish cocoa, so I have not recommended buying this on the weather. With La Nina Modoki, global cocoa production may be rosy into 2022, so my bias has been to sell rallies.
COFFEE: NOT ENOUGH RAIN NEXT WEEK FOR BRAZIL COFFEE WITH HURRICANE IN GULF POSSIBLY IMPACTING WAREHOUSES
Coffee prices have been so volatile the last month or so, I had advised taking some profits on long futures last week, but if traders are still long coffee in the ETF JO or short the $1.80 coffee put from more than a month ago do not let prices go below the trend line. ( I will have updates next week but as usual super busy with other markets right now and weather)
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