The First Wheat Bull Market in Years? How Climate is Causing Crop Woes for the U.S. Plains
Our video below addresses three very important climatic teleconnections that may worsen the U.S. wheat crop in the weeks ahead. April and May are critical times for wheat crops in Europe, Ukraine, and most of the U.S.
The key teleconnections that help us develop ETF, futures and option strategies for clients are: 1) A weakened La Niña; B) Lingering negative global atmospheric angular momentum (GLAAM) that can sometimes result in dryness for parts of the Midwest or the Plains; C) A major warm block (-WPO index) in northwestern Alaska that can bring occasional cold snaps to either the U.S. and/or Russia that could threaten wheat yields.
Source: Pearson Education
Global Atmospheric Angular Momentum (GLAAM) is a measure of the total rotation of the atmosphere relative to the Earth. When this index is negative, it indicates that the atmosphere is rotating more slowly (ice dancer on the left) than the Earth’s surface, typically resulting in easterly wind anomalies.
In the spring, a negative GLAAM phase often leads to dryness in the U.S. Great Plains wheat areas. The key point here is that even though La Niña has “officially” weakened to neutral, the atmosphere can still occasionally act as if La Niña is present when GLAAM is negative.
See this five minute video (below) that discusses the developing Plains drought and which factors we are watching.
Source: Jim Roemer & Google’s NOTEBOOK-LM
Other factors have influenced wheat prices, resulting in major volatility. They are:
- The Middle East war and logistical issues in transporting wheat
- The Russian war on Ukraine could lower Ukrainian wheat production
- Recent heat stress to crops in India
- The stronger U.S. dollar can sometimes hurt grain prices
Source: Barcharts and WeatherWealth newsletter
Jim Roemer
