Via Bloomberg: Betting on the weather:

Some funds seek to exploit market imperfections. A temperature contract for Philadelphia might be priced lower than one for Baltimore, even though the weather in the two cities is often closely correlated. Others try to predict jet streams, fast-moving air currents in the upper atmosphere that can influence storms and temperature.

A large proportion of trades are tied to bets on other
commodities. If a fund is long on natural gas—betting on
increased prices—it might hedge by buying weather contracts
that pay out in the event the winter is warmer than expected.