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.
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:
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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