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The EPO Index - Key For Natural Gas And Grain Trading This Summer

Jul. 13, 2017 12:02 PM ETUNG, WEAT, CORN6 Comments
James Roemer profile picture
James Roemer


  • Spring wheat still has a drought, but farmer hedge fund selling hits the market.
  • Grain and natural gas trading will be based on the EPO.
  • What is the EPO Index?.

It is rare that I write back to back reports within a few days, let alone a month on Seeking Alpha, but I wanted to share with those trading natural gas and grains, why a potentially negative EPO index could mean the highs are in grains; at least for a while.

I alerted paying customers "only", yesterday, to what I believe will be a major shift in the U.S. weather pattern, before models began showing this late Wednesday and on Thursday morning. A full description of the EPO and all other teleconnections that affect global weather, thousands of miles away can be found here.

Map above--Stormvista EPO

While drought conditions still affect a large part of the far NW corn (CORN) and spring wheat belts, this negative EPO (above) represents blocking over Alaska. The result? Often cool fronts sagging further south into the heart of the Midwest. It is rare to see Midwest droughts last through August if the EPO remains negative. Almost every major grain belt drought (1936, 1956, 1983, 1988, 2012 and others) did not have warm blocking over Alaska.

Natural gas prices (UNG) have had a little lift of late, in part due to extreme Midwest and southern heat expected over the next week or so. Some of this will make it into the Eastern U.S. The question is, will it last? Without the EPO index going positive, it is possible that our hot summer forecast may be tempered a bit. A lot to digest, you bet.

What about Wheat Prices?

Wheat (WEAT) prices were on a tear until recently because of the following factors. The drought in the Northern Plains spring wheat belt; the lowest U.S. wheat acreage in years and a smaller crop hitting the market, plus worries over a lower crop in Europe and potentially Australia. When global

This article was written by

James Roemer profile picture
Jim Roemer owns the site (www.bestweatherinc.com) offering FREE and SUBSCRIPTION BASED weather-related blogs for commodity traders and farmers. He also is co-founder of CLIMATE PREDICT, the most detailed and accurate long-range global weather forecast tool. He was one of the first meteorologists ever to become an NFA registered Commodity Trading Advisor and has worked with major hedge funds, Midwest farmers and traders for over 30 years. His unique ability to forecast both short and longer range weather trends, with a special emphasis on interpreting market psychology and major market moves in grains, softs, and the energy markets, has made him a global industry leader in the commodity risk management industry.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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