JIM ROEMER ON DEWPOINTS -EPO and GRAINS
We alerted “private” paying customers only, early Wednesday morning, about a potential change in the weather pattern for the Midwest drought as we head deeper into July. While our newsletter customers were alerted two months ago about about being long the GRAIN ETN—JJG, any slight changes in rainfall potential or a migration in the Midwest dome will create incredible grain market volatility. Dewpoint temperatures, which can help indicate the amount of moisture in the atmosphere, are unusually high over the Midwest currently. What this means is, that the potential is high for rain in some key dry Midwest regions, any time a front comes through. Normally, during the great bull market grain droughts of 1983, 1988 and 2012, dewpoints are in the 50’s in the Midwest, not the 60’s and 70’s like they are now.
In meteorology, dewpoints are extremely important for rainfall potential. The higher the dewpoints the more humid it is and the more uncomfortable we feel. The dark black number to the left of the circle (see map above) is the dewpoint. Notice dewpoints only in the 50’s over the Dakotas where the drought has hurt wheat crops, but are over 70 in most of the Midwest grain belt. With a negative EPO (see next paragraph), more fronts could come down into the grain belt in a couple weeks. This, combined with >70 dewpoints, should increase rainfall amounts.
What is the EPO?
But what about the longer term pattern? During almost all major Midwest droughts, something we call the Eastern Pacific Oscillation Index (EPO) is almost always positive. This has to do with the weather over Alaska and western Canada. When the EPO index is negative (as models are suggesting) a western ridge near Alaska can open the door for Midwest cool fronts and a NW flow, killing the ridge. Given the high dewpoints, this could set the stage for much more impressive rains as we head deeper into July. IF THIS IS THE CASE, then corn and soybean prices have little chance (for now) for any major additional rally. However, our longer term research suggests “market volatility: and the heat and ridge could still affect parts of the Midwest again, later.
SOURCE OF MAP ONLY–WXBELL
EPO INDEX NEGATIVE COULD CHANGE THE MIDWEST WEATHER PATTERN AND EASE SOME DROUGHT CONDITIONS
Will the EPO go positive again? That would suggest that this break in corn and soybeans is only temporary and hot, dry weather could last well into late summer. This information is reserved only for paying clients to our daily service at subscriptionsbestweather@gmail.com If the EPO does go positive, a major rally in corn and soybeans will occur, if NOT, a collapse in prices. It is that simple.
