Commodity strategists have issued a warning. Markets are underestimating climate volatility. These are the same strategists who spent the last decade telling you to buy soybeans based on Fibonacci retracements.
A Super El Niño hit. Europe had a heatwave. Wheat prices moved. Someone wrote an article about it. Now we're pretending this is actionable intelligence instead of what it actually is: a retrospective explanation for why last quarter's trades didn't work.
The strategists say climate volatility affects multiple asset classes. Groundbreaking stuff. Next they'll tell us rain impacts corn or that frozen orange juice futures respond to temperature changes. Maybe they could option that one into a movie.
Here's what happened. Retail traders read about weather patterns. They opened positions. The weather changed. The positions went to zero. Now those same traders are reading strategist reports about how nobody saw this coming.
Everyone saw it coming. You just can't trade it. Weather derivatives exist for people who actually need to hedge agricultural exposure. They don't exist so Gary from Scottsdale can leverage his Robinhood account against European temperature forecasts he read about in a headline.
The Super El Niño was predicted months in advance. Scientists published papers. Meteorologists issued warnings. Did that help you time your cotton entry? No. Because technical analysis doesn't account for atmospheric rivers and neither does your moving average crossover system.
Markets aren't underestimating anything. They're pricing in the fact that commodity volatility remains impossible to predict with enough precision to profit consistently. The strategists know this. They're paid to write reports, not to be right.
The heatwave passed. El Niño ended. Prices normalized. Your stops got hit months ago.
Photo by on Unsplash
Leave a Comment