Commodity Blog

Jul 15 2020

Why Energy Traders Need Reliable Weather Forecasts

Have you ever looked at the weather forecast, saw it was going to rain and made a change to your weekend plans? Just as you may adjust your plans due to a rainy forecast, energy traders use weather data to forecast changes in energy demands and adjust their trades accordingly.

Increases in temperature typically increases our energy demand, as when the weather is warmer more electricity for air conditioning is used and less natural gas, oil, and wood for heating. While heat waves are often cited as having energy pricing implications, hot weather isn’t the only weather condition that impacts energy prices. Often, it is the harsh cold or massive storms that impact supply and demand, which can potentially lead to fluctuations in energy prices. [1]

The degree of impact weather has on energy prices depends on where weather changes take place. Extreme heat or cold in the northeast or other high populated areas has a larger effect on energy prices than temperature changes in less populated parts of the country. This is why Energy traders need forecast information that shows where major weather changes are expected to occur. [2]

In addition to temperature changes, the amount of rainfall impacts energy prices. A drought can damage corn and other crops, which has significant impacts on supplies and prices for animal feed, livestock, meat and dairy products, and processed grain products, including ethanol. It’s important that energy traders are able to monitor areas that are experiencing a drought and adjust their trades accordingly.

If a energy trader has access to better weather data and can forecast a coming change more quickly and accurately than other traders, they will have a huge advantage in the marketplace.

To meet this need Barchart provides weather solutions for every application. With our weather data and tools you can get access to current conditions and forecasts, or more advanced information derived from geospatial imagery. We make it easy to access basic weather data to power your app or understand weather conditions in your area.

Our Weather API provides current conditions and forecasts based on zip code as well as weather maps based on type or region. Features include:

  • Ag Related Information - Get up-to-date information on all the Ag weather you need. Data points include soil moisture, evaporation, solar radiation, livestock safety index, growing degree days, heating degree days, and the current drying index. For more advanced Ag weather data, check out our Crop Factors API.
  • Current Conditions - Access current weather conditions for your local area or elsewhere. Information includes temperature, atmospheric pressure, heat index / wind chill, wind direction, wind speed, humidity, and dew point.
  • Forecasts - Get forecasted weather information by day as requested by zip code. Information includes amount of precipitation, chance of precipitation, windchill, dew / frost weight, and hours of sun.
  • Maps - Access map images for many different plot types.

Energy traders can also access our Ag Weather Data through our innovative commodity trading platform cmdtyView. Our advanced mapping feature allows our users to visually analyze any agricultural data, energy data, or ag weather data that is available through Barchart. Users can view and analyze data, such as the current and historical US weather radar, and can overlay different types of data, such as refined fuel indexes and a drought monitor. Register for our Summer 2020 Grain Market Outlook and cmdty Updates Series to learn more about our interactive geo maps technology.

Drought Monitor

With our ag weather data you can access the data you need, analyze it with our tools, and quickly make decisions that matter. To learn more about the solutions available to you drop us a line at cmdty@barchart.com or reach out here.

  1. https://www.nrg.com/insights/innovation/the-relationship-between-weather-and-energy-prices.html
  2. https://medium.com/@WeatherDecTech/accurate-weather-forecasts-are-indispensable-to-energy-traders-be225a641536

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