(KCH25) (RMH25) (CCH25) (CAH25) (SBH25) (CANE) 

“Why even with a weak La Niña, have coffee, cocoa and sugar prices soared?”

Below are excerpts from my recent WeatherWealth newsletter. Many agricultural commodities are breaking out to the upside and the weather is definitely a key reason. In contrast, warmer U.S. weather returning and worries over a potential increase in domestic oil production, combined with trade tariff concerns have pressured energy markets again. 

– Enjoy

Why are coffee prices soaring? 

It was these wilting trees in 2024 that have now resulted in recent crop survey tours with many analysts lowering their 2025-2026 Brazilian crop by another 5-10%.

Improved October rainfall kept the situation from being even more of a disaster. Nevertheless, coffee stocks continue to fall and the charts are very bullish.

In addition, a stronger Brazilian Real results in farmers holding back on sales of commodities such as coffee, soybeans and sugar.

Going forward, the big question for the coffee market is “How will a weak La Niña event (or neutral situation) affect production in Vietnam, Colombia and Brazil, deeper into 2025-2026?” I will have studies later on. of course.

Nevertheless, due to Theta (time decay) for certain coffee option strike prices, we suggested call option strategies that were potentially profitable for those WeatherWealth clients who took our advice two months ago.
 

Why cocoa prices have higher to go, even at these historical levels

One of our most successful recent trade suggestions to WeatherWealth clients has been in cocoa. Prices have now soared more than $11,000 a contract in two weeks on growing new concerns for the 2025 West African mid-crop, but also potentially for the main crop. The crop problems never end in West Africa. In my opinion, this is brought on more by climate change than by El Niño or La Niña events.

My in house teleconnection program looks at weather signals thousands of miles away to second guess standard computer models.

Typically with a weak La Niña (negative MEI index), we can see a wet signal for West African cocoa (+3.45).

 However, notice that a total of six of the most important climatic variables I look at above (Indian Dipole and record warm ocean temperatures in the Atlantic and near West Africa) are all dry signals (negative values). One combines all of these and we can see that humidity levels and rainfall will remain below normal, thus hurting more of the cocoa crop.

Why, in the face of a bear market in sugar, we reversed our attitude

Other than the Brazilian Real breaking out technically that can often help sugar and coffee prices, new weather problems in Australia from harvest delays and a lower crop in Thailand, as well as in India, helped sugar prices rally 10% off their lows.

We caught wind of this around January 21st and advised subscribers to our WeatherWealth newsletter that I was no longer bearish and to look for potential buying opportunities. 

Is it too late to buy sugar now. Is this old news? That’s where our newsletter comes in handy for many markets. We also issue “Weather Spiders” each week for all markets.

Sources: A Real Sugar Expert & WeatherWealth Newsletter

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Thanks for your interest in commodity weather!
 

Jim Roemer, Scott Mathews, and The Weather Wealth 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 established a unique standing among advisors in the commodity risk management industry.