Meteorology in 2024: How Weather Shaped the Commodity Trading Landscape

Extreme temperature raised energy prices, wet weather held open cast mining operations, and dry weather destroyed millions of tonnes of grains.  

As climate change continues to cause unpredictable and severe weather events, the need for precise and accurate weather forecasting in commodity trading has never been more critical. This has led to a rising demand for meteorologists among trading firms. However, where there is an opportunity, there lies a challenge, and the question remains on what the right desk setup looks like. 

In this article we explore the impact weather had on the commodity trading landscape in 2024, and why meteorologists have become a critical hire for trading firms around the world. 

Challenges in Hiring the Right Meteorologists for Commodity Trading Platforms 

Considering the intricate nature of meteorology, and its relatively recent rise in popularity as a function within trading firms, understanding the unique skills sets and backgrounds required is critical to successfully integrating meteorological expertise. Through our network of traditional meteorologists, quant and data science specialists, we have identified 6 key challenges faced by trading firms when hiring meteorology professionals to optimise their trading strategies. 

1. Specialised skill sets The intersection of meteorology and trading requires a unique blend of skills. Meteorologists need advanced knowledge in atmospheric sciences and expertise in data analysis, numerical methods, modelling and statistics. These professionals must also understand the economic aspects of commodities trading, which is not a common combination of skills.
2. Competition with hedge funds A few multi-strategy funds are renowned for having some of the best weather and climate models in the industry, offering very high salaries to attract top talent. These leading multi-strategy funds have been known to provide seven-figure compensation packages to their top modelers, coupled with lengthy notice periods to protect their weather desk intellectual property. This competitive environment makes it challenging for other trading firms to compete for the same pool of highly skilled meteorologists who have experience in the commodity trading markets. As a result, trading firms have had to look beyond the traditional pool of candidates and explore the academic world and adjacent markets to attract highly skilled meteorologists.
3. Advanced educational requirements The finance sector predominantly seeks meteorologists with advanced degrees (Master’s or PhDs) in Atmospheric Sciences or related fields. These professionals are not only well-versed in meteorology but also in programming, statistical modelling, and data visualisation, making them ideal for quant jobs in trading firms. Finding individuals with these qualifications can be difficult due to the specialised nature of the field. The major/minor of the US college system arguably most beneficial in allowing a blended skillset to develop.
4. Need for real-time analysis and communication Meteorologists on trading platforms need to provide real-time insights that influence trading strategies and ensure competitive advantage. This requires excellent communication skills to translate complex weather data into clear, actionable information for traders. Identifying meteorologists who can excel in this fast-paced, high-pressure environment can be a significant challenge.
5. Geographic and lifestyle preferences Many meteorologists prefer hybrid or remote work environments. As a result, trading firms must be flexible with work arrangements to attract these professionals, which can be a logistical challenge for firms who are maintaining a traditional desk setup.
6. Integration into trading teams Meteorologists must work closely with traders, agronomists, economists and other experts to integrate weather data with economic and market analyses. This interdisciplinary collaboration is crucial for developing comprehensive insights and robust trading strategies. Ensuring a seamless integration of meteorologists into existing trading teams requires careful planning and management.
7. Nuance between commodities In energy trading, meteorology primarily impacts demand dynamics and renewable energy generation, with a focus on short-term events like extreme temperatures or storms. In contrast, agricultural trading depends on meteorology’s effect on supply-side factors, often requiring medium- to long-term weather analysis and a tailored analysis for each crop. Weather talent combined with agricultural expertise is in high demand, but attrition from agri to energy desks is relatively common in early-mid career.  

Enhancing Trading Strategies with Advanced Meteorology 

The convergence of meteorology and trading is intensifying as weather forecasting becomes a vital component of both discretionary and systematic trading strategies, and risk management. Developing an advanced weather desk that employs sophisticated data analysis from AI developments, precision through spatial analysis, and domain expertise can give trading firms a significant competitive edge. However, the human element remains indispensable. 

By offering more flexibility and competitive salaries and targeting meteorologists not just from competitors but also from adjacent markets and the world of academia, trading firms can attract top talent to navigate the increasingly unpredictable landscape of commodity trading. As weather continues to play a pivotal role in market dynamics, integrating meteorological insights into trading strategies is not merely beneficial but essential for success. 

As weather desks evolve, we continually learn about optimal setups and the evolving role of traditional meteorologists amid the rise of AI and data-driven strategies. Bridging the gap between weather data and actionable insights for traders remains a critical focus, ensuring that trading firms can make informed decisions based on precise and timely meteorological information. 

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Proco Group partners with trading firms to both deliver comprehensive talent and market intelligence and hire in-demand talent for critical roles. For a conversation about your firm’s meteorology hiring strategy, whether you need to map out your market or have a critical role to fill, please don’t hesitate to get in touch. 

Katie Dunbar

Associate Partner, Commodities, EMEA

katie.dunbar@weareprocogroup.com | Connect on LinkedIn