The commodities market is an incredibly volatile and unpredictable investment route. With weather patterns shifting and concern growing regarding global climate change and its effects on crop production, strategists are learning from their experiences in energy markets and taking weather forecasts into consideration. In recent years, the continued deregulation of energy markets resulted in higher liquidity levels, which increased weather-related volatility and impacted not only producers, but buyers and investors as well. The same story could play out in the commodities trade. Weather stands out as a major unknown factor when looking into commodities investment strategy and options. Vulnerable to unexpected droughts, storms, and influences such as La Nina and El Nino, yields of crops such as wheat, corn, soybeans, and more are highly affected by changes in climate. The lesson that investors should take from such considerations is that they need to plan for abnormal market conditions due to variances in weather. Rather than focusing on what happened most recently or in the past, many strategists are now gaining insight into what may happen in the future and taking investment cues from that knowledge.
— About the Author: A seasoned financial professional, Bart A. Grenier provides colleagues and clients with a high level of expertise pertaining to a wide range of investment matters, including those associated with positive impacts on climate change. Bart A. Grenier currently acts as Chair and Chief Executive Officer of The Boston Company Asset Management, LLC. Mr. Grenier has also worked with Deutsche Asset Management and the Fidelity Management & Research Company.