I began forecasting the Arctic Pig (Polar Vortex) several weeks ago to clients and some of the moves in commodities the last week, have been nothing short of amazing. Cash natural gas soared some 32,000% in Texas, as some wells froze, while wheat crops from Colorado, Kansas, Oklahoma, and Texas, not only have some drought conditions but had to brave some historical record low temperatures.

However, Russian export policies and global demand will play at least as important a role in the wheat market the next few months, as US weather. We need to see further weather problems to maintain the bull market in grains, in my opinion.

Historical freeze for Plains wheat

Look at some of these temperatures in Kansas on February 15th. While wheat crops often have 9 lives, the lack of snow cover and drought could cause further concern in the months ahead. But it may not be till spring that more of a concern in the wheat market is realized. If spring is wet, this would off-set the frost damage.

Other than the lack of snow cover in key wheat regions from Colorado to Texas and bitterly cold weather last week. Clients around the world are watching closely whether this drought expands this spring?

Drought in some parts of the Plains, La Nina, and early spring weather forecast

While La Nina has been the main reason for weather problems in parts of Argentina and Brazil for corn and soybeans, it is also playing havoc on the US wheat crop. But La Nina is not the only factor. In fact, my in-house long-range weather forecast software (CLIMATEPREDICT), looks at teleconnections such as Sea Ice, the Arctic Oscillation (AO), and NAO index to predict weather months in advance. This is a preliminary forecast but take a look at what could happen this spring.


But what about summer for the Midwest corn belt? Will Russian weather improve for the wheat crop? How can we use some of these analog years listed above to predict US corn and soybean yields and price action? What are my best trading and hedging strategies?

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The Arctic Pig and how it hurt wheat crops

Anyway, not only is the US wheat crop in trouble, but parts of Russia may be under the gun from the remains of the recent polar vortex (Arctic Pig) and some freeze conditions before February 25th. It will not be until spring that weather forecasts will be important for global wheat markets, in Russia and Europe as well.

The Arctic pig has been the main reason for some excitement in the wheat market but has little effect on crops in South America. Corn, soybeans, and even coffee have been compromised by La Nina and other climatic factors.


Shown above is how the AO index was negative this past week (Arctic Pig) causing major snowstorms, power outages, spikes in energy, and wheat prices. The lower map shows the Arctic Pig heading back north next week.

The Arctic pig and record cold weather will retreat to Canada over the next couple weeks, but that does not mean that the wheat crop from Kansas to Texas will receive any improved weather, anytime soon. But will all of these weather problems really be enough to warrant a bull market in wheat at these prices? It all depends and for that, we have some answers here.

Jim Roemer