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“Midwest wildfire smoke, the weaker dollar & the IOD (Indian Ocean Dipole): Their influence upon Ag Commodities”

By Jim Roemer - Meteorologist - Commodity Trading Advisor - Principal, Best Weather Inc. & Climate Predict - Publisher, Weather Wealth Newsletter

Scott Mathews, Editor

Grains:

There has been talk about a dry, hot June for parts of the Midwest corn belt. Along with the weaker dollar, this inspired a decent rally in corn prices last week. On the other hand, wheat recovered from an over-sold condition that included a big short position by speculators. In addition, flooding rains in the deep southern US could lower wheat quality ahead of the harvest, while China’s wheat crops have been hit by drought.

Trade Tariff hopes with China also helped rally grain prices, including soybeans late last week. However, the oat futures market has been the big weather play, rallying 10% on wildfires and drought in parts of Canada.

• Source: Collage image created via DALLE 4 is the property of BestWeather, Inc.

• Sources: Oat market chart by barchart.com with superimposed markings and comments by BestWeather, Inc.; Map showing Canadian crop stress by NOAA National Environmental Satellite, Data, and Information Service (NESDIS) Center for Satellite Applications and Research (STAR) , Superimposed comment/markings by BestWeather, Inc.

The Indian Dipole is just one teleconnection I use to predict longer-range weather, particularly for soft commodities.

• Source: IOD explanatory diagram by the Australian Government Bureau of Meteorology

“When the value is negative (blue shading on the map image above), the cool phase of the IOD is present with lower sea levels in the western Indian Ocean and higher sea levels in the eastern Indian Ocean. This is what we have today.” – WeatherWealth newsletter

However, there could be some influence on the Midwest summer forecast for corn and soybeans as well. To find out more about the Indian Ocean Dipole and how it may affect some commodities, click here: https://www.bestweatherinc.com/commodities/what-is-the-indian-dipole-how-does-it-impact-crops-and-global-commodity-markets/

Coffee:

After a stellar 15% sell-off in Robusta coffee a week ago, Arabica NY coffee soared this week. A higher Brazilian Real makes coffee more expensive in US dollars, and Brazilian coffee growers refrain from selling aggressively, as they wait for higher prices. In addition, while I see no frost prospects for Brazil, due to what we call a positive Antarctic Oscillation Index and increased solar activity, heavy rains in Colombia (#2 largest Arabica producer) helped prices to soar late this week.

• Image Source: Map images by WeatherBELL Analytics (used by permission)

Cocoa:

Prices soared this past week due to the weaker dollar and a poor mid-crop hitting the market. Notice the crop stress vs a year ago due to the dry winter in Ivory Coast and Ghana (strong Harmattan wind). It will be important to monitor whether an “El Niño neutral” becomes a weak La Niña later this year. If so, the 2026 crop could recover a bit later and be bearish (months from now).

• Source: Cocoa market chart by barchart.com with superimposed markings and comments by BestWeather, Inc.; NOAA National Environmental Satellite, Data, and Information Service (NESDIS) Center for Satellite Applications and Research (STAR), Superimposed comment/markings by BestWeather, Inc.

Sugar:

Weak crude oil prices and a recovery of crops in Southeast Asia have helped prices enter bear market territory. A negative Indian Ocean Dipole is usually beneficial for the Indian Monsoon and for Thailand’s crops

• Source: Map showing vegetation health by NOAA National Environmental Satellite, Data, and Information Service (NESDIS) Center for Satellite Applications and Research (STAR), Superimposed caption/comments/markings by BestWeather, Inc.

https://www.bestweatherinc.com/

Thanks for your interest in commodity weather!

Jim Roemer, Scott Mathews and the BestWeather Team

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 commands a unique standing among advisors in the commodity risk management industry.