Soybean Oil Market Insights: Weather Impact and Trading Strategies
Soybean Oil Market Insights: Weather Impact and Trading Strategies
By Jim Roemer - Meteorologist, Commodity Trading Advisor, Principal at Best Weather Inc. & Climate Predict
In the latest edition of our WeatherWealth newsletter, we delve into the intricate relationship between weather forecasting and commodity trading, particularly focusing on the impacts of recent drought conditions on various markets, including soybean oil. Our in-depth analysis provides valuable insights and trading strategies that can help farmers, commodity traders, and ETF investors navigate the complexities of the market. You can access the full issue for free at the end of this report.
For the past four years, we have contributed to Barcharts, offering expert guidance to our clients, which includes farmers and traders across a wide range of commodities from soybeans to natural gas. Our unique approach involves challenging conventional weather models and developing tailored trading strategies based on over 80 years of combined experience in weather-driven market analysis.
In July, we advised our clients to take a short position on soybeans, capitalizing on misleading weather forecasts that predicted a drought in the Midwest. This strategic move potentially yielded profits of at least $1.00 per bushel, alongside a 50¢ gain in corn.
Currently, we are closely monitoring weather patterns in Brazil, where extreme dryness has previously supported price rallies in coffee, sugar, and soybeans. Our forecasts indicate a significant shift in the South American weather pattern is expected to commence next week, which could have profound implications for these markets.
Additionally, factors such as deforestation and the recent El Niño phenomenon are influencing weather conditions. Our proprietary weather program highlights how varying La Niña events affect South American weather in October. The recent changes in rainfall forecasts for Brazil have already impacted the coffee market and will likely influence soybean, sugar, and orange juice trading in the near future.
Russia's Wheat Crisis
Severe drought conditions in Russia have led to a rally in wheat prices, raising concerns about export strategies and global demand. The interplay between Russia's export decisions and rainfall patterns in Australia and the U.S. Plains will be critical in the coming months.
This summer, the North Atlantic Oscillation (NAO) index has reached unprecedented positive levels, contributing to heat and dryness across Eastern Europe and Western Russia. Our weather program indicates that the NAO index is expected to turn negative in early October, potentially alleviating some drought conditions in Western Russia, which may or may not influence the wheat market.
For WeatherWealth subscribers, ClimatePredict is available at no cost, offering comprehensive coverage of agricultural markets worldwide, including natural gas.
What advanced weather forecasting techniques are we employing to assess crop prospects for South American corn and soybeans? What potential global weather challenges are on the horizon for wheat, and what trading strategies are we developing for coffee, sugar, and more?
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Thank you for your interest in commodity weather insights!
Jim Roemer is the owner of Best Weather Inc., providing weather-related blogs for commodity traders and farmers. He co-founded Climate Predict, a long-range global weather forecasting tool. With over 35 years of experience, he is recognized as a leading Commodity Trading Advisor, specializing in market psychology and trend forecasting in grains, softs, and energy markets.