Weather May Threaten Commodity Markets

When it comes to predicting commodity market moves for 2016, farmers and ranchers should look at past economic and weather trends across the globe. Jim Bower of Bower Trading says producers need to look on a more international scale than a local level for prices and risk management this year.

Bower: “The change in commodities is that it has gone very much international in scope. There is an international awareness. You really can’t get your pricing or your trading right unless you have the international backdrop. Now you can overlay it with technical factors which you can do yourself or with an advisor to fine tune your program. Don’t look at just the local or regional — look at the international that is where you get your success.”

Bower says the transition from El Niño to La Niña will affect each region of the United States differently. With La Niña impacting mostly the Midwest, he says that may impact corn prices which will, in turn, impact cattle prices.

 

Bower: “Well, I’ve been telling feedlot operators and end-users of corn for the last three months to get their needs covered at those lower levels. We did a pretty good job of that but they need to get that covered to make sure that they are not in a position to get hurt adversely if that La Niña event becomes a full scale weather problem. Weather forecasting is not the easiest subject in the world. Weather markets are mercurial in nature and difficult to master. I’ve spent a lot of time watching it but this seems to be a year where the market seems to be a little more threatened by this approaching La Niña.”