What is a negative SOI Index? >>> Implications for grains and soft commodity markets
What is a negative SOI Index? > > > Implications for grains and soft commodity markets
by Jim Roemer - Meteorologist - Commodity Trading Advisor - Principal, Best Weather Inc. & Climate Predict - Publisher, Weather Wealth
- Tuesday, May 2, 2023
While the SOI index is not the only teleconnection that influences global weather, notice that most models have it trending more negatively as we head deeper into May. This means that occasional "El Nino-like" conditions will exist, even though officially, it may be a few more months until an El Nino is official.
The SOI index will need to stay negative for more than one or two months in order to convince both NOAA and the Australian Government to officially declare that El Nino has formed.
Shown above are May rainfall projections from my in-house weather software ClimatePredict. This is based strictly on the SOI index going more negative deeper into the month of May.
A negative May SOI index should suggest:
- More rains in drought-stricken Plains wheat areas;
- Some wet weather signals for the Brazil sugar harvest;
- Neutral conditions for West African cocoa (probably no big issues yet for the main cocoa crop);
- Dry weather for Thailand sugar;
- Dry for eastern Australia.
Two of our big calls in the commodity markets, of late, were:
- Calling the collapse in KC wheat prices on my forecast for improving global weather
- Ditto for the bull market in sugar a few weeks ago.
(We gave timely advice to farmers with KC wheat well over $8.00 to hedge a good part of their wheat, as well as new crop corn a few weeks ago.)
Will our forecast change? How do we second-guess standard computer models that the average meteorologist relies too much on? That is what we do at WeatherWealth: We give you 35 years of Jim Roemer's experience, lending valuable insight into the psychology of the markets and trading ideas. Will the SOI go back to positive and bring weather problems later to the corn belt?
Our BestWeather Spider is featured in our WeatherWealth newsletter each week for multiple markets. Look how you may have profited during the last few weeks if you were a subscriber and took advice (it would have paid for our newsletter for three years on just two trades). But now, what do we see going forward?
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Thanks for your interest in commodity weather!
Warm Regards,
Jim Roemer, Scott Mathews, and The Weather Wealth Team
- Please feel free to learn about Jim Roemer, our track record, and how we use weather to help traders around the world. If you have any questions, please don't hesitate to drop me a line - Scott Mathews, Editor
Mr. Roemer owns Best Weather Inc., offering weather-related blogs for commodity traders and farmers. He also is a co-founder of Climate Predict, a detailed long-range global weather forecast tool. As one of the first meteorologists to become an NFA registered Commodity Trading Advisor, he has worked with major hedge funds, Midwest farmers, and individual traders for over 35 years. With a special emphasis on interpreting market psychology, coupled with his short and long-term trend forecasting in grains, softs, and the energy markets, he established a unique standing among advisors in the commodity risk management industry.
Trading futures and options involves a significant risk of loss and is not suitable for everyone. Past performance is not necessarily indicative of future results. There is no warranty or representation that accounts following any trading program will be profitable.
On the date of publication, Jim Roemer did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
