January 25 – The market is starting to look ahead to the U.S. spring planting season, now that the January USDA crop report is behind us and the trade is increasingly comfortable with the size of the South American crops. We expect the Midwest weather pattern to be influenced by a transition from a strong El Nino to a La Nina pattern this year, as sea surface waters in the equatorial Pacific cool, from their current warm state. However, other factors will be at play to influence how that plays out as well.
One of the factors expected to have a significant influence is a cooling of sea surface temperatures in the North Pacific. This region that had been warm, currently has below-normal surface readings as highlighted in the graphic to the left. Forecasters at Commodity Weather Group identified three other analog years where the U.S. spring time period featured a strong El Nino combined with a cold pool in the Northern Pacific (1987, 1998 & 2010).
The maps below show the temperature and precipitation anomalies seen in those years. Three years is not a large set to base a forecast on, but they would suggest a bias toward a warm March to May period for the Midwest, with near-normal rainfall to provide a favorable start to the growing season. Summer weather patterns for the Midwest are expected to hinge on the speed of transition from El Nino to La Nina. That transition is currently slow, but expected to speed up favoring a modestly warm, but wet pattern.
Unless otherwise noted, the posts on this blog should be construed as market commentary, merely observing economic, political and/or market conditions, and not intended to refer to any particular trading strategy, promotional element or quality of service provided by INTL FCStone Inc. or its subsidiaries. INTL FCStone Inc. is not responsible for any trading decisions taken by persons viewing this material. Information contained herein was obtained from sources believed to be reliable, but is not guaranteed as to its accuracy. These materials represent the opinions and viewpoints of the author, and do not necessarily reflect the viewpoints and trading strategies employed by INTL FCStone Inc. or its subsidiaries. Reproduction without authorization is prohibited. All rights reserved.