The picture from Space that shows why Commodities are non-correlated to the Stock Market:

Nasa Pic

Picture Courtesy: MODIS

Right about now, you’re sitting there thinking: How on earth does this weather picture of the Wyoming & South Dakota have anything to do with stocks not being correlated to commodities?

Well let’s start with the obvious… The white in the picture is snow… a lot of snow.. in early October. The Earth Observatory provides a description of just how bad it was.

“Between October 3–5, 2013, an unusually early blizzard smothered northeastern Wyoming and western South Dakota with wet, heavy snow—not to mention rain, hail, thunderstorms, and even tornadoes. In South Dakota’s Black Hills, the storm dropped more than three feet (90 centimeters) of snow in some areas, knocking out power for about 25,000 people and killing tens of thousands of cattle.”

Wait?!?! What was that last part? Killing tens of thousands of cattle… How does that happen? This is the place where Cattle are raised. Where they’re supposed to be… But because this massive storm hit so early, the cattle weren’t able to grow their winter coats in time and many of them froze to death. Many, as in 15% to 20% of South Dakota’s cattle population died in this storm.

Weather always has the possibility of affecting commodity prices, but we usually think of things like floods and droughts and poor weather affecting grain prices (poor or great growing conditions) – you don’t usually think of the weather affecting cows and cattle prices. But it can, just look at the rise in prices since that fateful blizzard at the beginning of October.

Live Cattle
Chart Courtesy:
(Disclaimer: Past performance is not necessarily indicative of future results)

Which leads us to, commodities markets non correlation with the stock market. Things like a freak blizzard causing an up trend in cattle prices simply aren’t part of the stock market world. Prices aren’t rising because of a good consumer confidence number, earnings report, or interest rate decision. Prices are rising because there are 30,000 less cattle in the world (economics 101 = supply down, price up).  In more sophisticated vernacular – the two markets have different price drivers, and the price driver for the cattle is about as far away from the price drivers for the stock market as you can get.



  1. You have very good knowlwdge in this article.

Speak Your Mind


Interested in distributing or reprinting this content? Check out our reprint policy here.


Forex trading, commodity trading, managed futures, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors.

The entries on this blog are intended to further subscribers understanding, education, and – at times- enjoyment of the world of alternative investments through managed futures, trading systems, and managed forex, and is not intended as investment advice, or an offer or solicitation for the purchase or sale of any financial instrument. Unless distinctly noted otherwise, the data and graphs included herein are intended to be mere examples and exhibits of the topic discussed, are for educational and illustrative purposes only, and do not represent trading in actual accounts. Opinions expressed are that of the author.

*The mention of specific asset class performance (i.e. +3.2%, -4.6%) is based on the noted source index (i.e. Newedge CTA Index, S&P 500 Index, etc.), and investors should take care to understand that any index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship and self reporting biases, and instant history.

The mention of general asset class performance (i.e. managed futures did well, stocks were down, bonds were up) is based on Attain’s direct experience in those asset classes, estimates of performance of dozens of CTAs followed by Attain, and averaging of various indices designed to track said asset classes.

It should be noted that past market performance is not indicative of future market movement.No market data or other information is warranted by Attain Capital Management as to completeness or accuracy, express or implied, and is subject to change without notice.

Managed Futures Disclaimer:

Past Performance is Not Necessarily Indicative of Future Results. The regulations of the CFTC require that prospective clients of a managed futures program (CTA) receive a disclosure document when they are solicited to enter into an agreement whereby the CTA will direct or guide the client’s commodity interest trading and that certain risk factors be highlighted. The disclosure document contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA.