Grains, Weather Cycles and more: Commodity Update/Portfolio

"Truth is stranger than fiction, but it is because fiction is obliged to stick to possibilities; truth isn't."

Traders!

There are several compelling reasons to consider buying grains during the summer months. Key factors supporting a hot July and possibly a hot first half of August include a negative Pacific Decadal Oscillation (PDO) and colder than normal sea surface temperatures in the Gulf of Alaska. Additionally, warmer than normal sea surface temperatures in the Northwest Atlantic and a neutral ENSO (El Niño-Southern Oscillation) reading by July, trending towards La Niña, also contribute to these predictions.

The developing negative Global Angular Momentum (GLAAM) by late June and a likely weak and northeasterly displaced Bermuda High further support the forecast for hot weather. Extreme drought conditions in Mexico are expected to translate into a very weak Southwest U.S. monsoon season, particularly in the latter half of the growing season. Moreover, the effects of the Tonga volcano, with extreme heat and moisture, are being exacerbated as water vapor aerosols begin to precipitate out of the lower stratosphere into the lower atmosphere, indicating that these volcanic weather effects will persist into 2025.

Additionally, there is a high correlation between top 5 percentile U.S. tornado springs and hot U.S. July growing seasons, suggesting continued heat. On a global scale, drought issues in Russia and Ukraine are likely to extend into July, impacting wheat and corn production. Furthermore, a slow start to the Indian Monsoon season in the northern half of the country, due to a more neutral ENSO combined with a benign Indian Ocean Dipole, may also carry over into July.

These combined factors create a strong case for anticipating a move higher in grain prices during the summer.

If you find this content valuable, please consider liking, sharing, and subscribing.
Share

Feel free to pass it along if you think it can benefit others.

Grains have weakened a bit lately but a few of them are holding on.