Best Weather Scenario Plays Out Around the World - James Roemer

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Paul Yeager: Welcome into the MtoM Show podcast. I'm Paul Yeager. Joining us is, I believe, now the most frequent guest of the MtoM Show podcast, James Roemer, Best Weather Inc., and how are you doing?.

James Roemer: I should get an award. You should. You guys should get an award too. You know, you always get awards. Things are great. Thank you very much.

[Yeager] We always talk about weather and it's it's last week or two weeks ago now I guess is when this comes out from this day that we're recording on Tuesday was a major storm in Iowa Greenfield Iowa specifically. But there were other storms, um, in Oklahoma, in Texas. I mean, it has been a very, very busy weather season. So I thought I had all the better reasons to have you on this week. Is that okay?

[Roemer] Absolutely. Thank you for having me.

[Yeager] Any idea why we're so busy and active?

[Roemer] Well, you know, when you go back and look at the incredible snows, you know, 40, 50 feet in Tahoe in California this past winter, that resulted in really a warm winter. The Midwest, obviously one of the warmest on record. The pressure, natural gas, 50%. Again, we have the weakening El Nino and the incredible storms in California that happened maybe once every five or ten years. Typically, that kind of contributes to the very active tornado season in the Midwest. That's what we've been seeing here over the last month or two.

[Yeager] And you're in Florida and already in short sleeve humidity season. Our friend Shawn Hackett is going to be with us here on the show. And I told him our weather is very much like it is there for you, bright and sunny. Then it rains for 2 minutes and then the bright sun comes back out. So it's going to be Florida weather.

[Roemer] Certainly. So you know, I lived in Iowa certainly for 12 to 15 years and had my share of tornadoes and incredible winter snows. It would be 55 degrees one day and 15 the next. I love Iowa weather, but certainly the severe weather needs to end as obviously corn and soybean farmers need a break. The drought is breaking. And that's one reason why I think new crop corn and beans don't have much more upside potential if we have generally good weather going through the summer.

[Yeager] Normally, James, I make you be the weather guy and stand in front and point to everything that's around you. But I'm going to be in control this week of your slides. Is that okay?

[Roemer] Yes.

[Yeager] Okay. What we're going to do is first again, Best Weather Inc. What we've talked about is you talk commodities and you talk weather and you have a strong interest in them both. And this is no different. So there's a little bit of what you do. But let's talk about Russia, because that has been the big thing in the wheat market, has been what's going on and how dry they had a frost or they had a freeze in Russia. Any indication this was coming?

[Roemer] Well, we did see the freeze about two or three weeks ago. And in my newsletter, whether well, for farmers and traders around the world can download and take a look at samples. I did mention this, this concern to the wheat market. Not only that, but there's been other problems around the world with WI crops too wet in the softer wheat belt of parts of the Southern Plains had drought about a month or two ago. But really corn and soybeans have been rallying in sympathy with that and some previous South American weather problems. I expect those grain markets kind of deviate and separate as far as the price action goes, as I think some of this weather in the winter is already built into prices in Russia.

[Yeager] Let's transition to wheat areas of the United States where, as you say on this chart right here, it's been too dry for parts of the plains, but that line is kind of narrowing. It looks like there's a little more moisture in some of the plains. Is there any particular reason in your mind why that's happening?

[Roemer] Well, because we still have lingering El Nino conditions. We have seen some improvement in the Kansas crop the last couple of weeks. Otherwise we price would probably be 10% higher than this. And we see off and on storms continuing over the Midwest and Southern Plains, which areas we still have. Again, some warming in the Pacific, which El Nino conditions. So I do expect off and on rain chances here for some wheat areas in the plains. But it's a little bit late to really help the crop in Oklahoma and Texas. The only drier weather obviously in June for the harvest.

[Yeager] The big question that I get is, all right, fine, we have rain now. We'll get it planted in the green belt. What's the moisture outlook look like for the rest of the growing season, at least through pollination?

[Roemer] Well, if you look at the active tornado seasons like 20 1923, look at weakening El Ninos, like the strong one in 2015 that weakened by the summer of 2016. I kind of look at all these different analogs and tell connections. Generally. I think we're going to probably have good pollination weather and probably a bear market, a new crop, corn and beans. At some point. Obviously, the record warm ocean temperatures, incredible record warm weather. I personally do believe in climate change somewhat more in my opinion. Everyone has a different opinion than sunspots, cycles and things. But the record, warm oceans, the incredible hurricanes we've had over the last few years, that is a question that's a caveat. Will we have a hot summer in the face of maybe normal to above normal rainfall? If it wasn't for the record, warm oceans, that would be like 90% confident that indeed we'd have a perfect pollination season. So we have to kind of monitor what's going on with this warming planet and how things will maybe change or not in the next 4 to 8 weeks.

[Yeager] You look at your next slide here, and this is specifically when it comes to Kansas City wheat I teased a little bit about already with the plains, but explain this chart to me.

[Roemer] Yeah, basically in my newsletter I will talk about anti herd mentality. How many people are long or short a market? 20 people are along than the anti herd mentalities bearish a crop moisture indices around the world global crops things like that. I look at all these different factors and I put them in my newsletter and basically give trading strategies. So really I've been slightly bullish wheat about two weeks ago catching part of this 10 to 15% move up one not extremely bullish one not a plus eight Spider or you know global crops score being a plus for the highest it could be the temperature index a plus for the scales go from minus for very bearish. The plus for why not more bullish perhaps because of the decent plains wheat crop and the seasonally wheat prices usually go down 75 to 80% of the time As we go into the month of June.

[Yeager] Well, part of that is because of rainfall. And again, it's tied to what's going on in Ukraine and western Russia. And I think Americans always kind of think they're the ones driving the market. But specifically in wheat, it is Ukraine and western Russia that you mentioned here. This is a little more detailed look of what's going on there. Tell me what these regions mean to the wheat market of the world.

[Roemer] Well, I think what Russia, Ukraine is in the top with two or three biggest exporters in the world. And obviously, you know, this is very, very important. My goodness, not only the Russian Ukraine war is adding to the fire, but of course, this drought situation freeze with perhaps 10 to 15% reduction in their crop. That's going to really make our situation very tight for the wheat market. So the question really becomes what happens with El Nino transition to La Nina and what happens longer term? I'm not quite sure about that right now, but I do think that as we get into the harvest, unless we have additional problems in other parts of the world for wheat, we'll probably top out here somewhat within the next 1 to 2 weeks.

[Yeager] You want to dip your toe into what this means politically if this happens to Russia's upper hand, that they've been even since the invasion of Ukraine.

[Roemer] Oh, boy. I'll let you comment on that. Boy, you know.

[Yeager] Didn't think so. I just wanted to make sure. But do you think it would have some impact then?

[Roemer] Because it certainly will. You know what Russia and Ukraine do with respect to exports right now and their whole political situation? You know, it's very, very complicated. I mean, there could be a tremendous squeeze and perhaps I'll be wrong. Maybe we'll have another 20% rally in wheat prices over the next three or four months. But I think that what's going to happen, I think we will see problems with the spring wheat crop further east around the Urals and Volga Valley in Russia. And if the northern plains in Canada that's been so wet recently continue to have planting delays and then a drought this summer, then I think we'll have a 20% rally up and we but right now I think I think things will settle down somewhat from where they've been over the last few weeks with the wheat market.

[Yeager] And you also, again, there's a little bit of a global picture. Now, again, this is you've said El Nino a couple of times on the right hand side of the screen, James, you've got the still warm and occasional El Nino conditions and the cooling that is in South America. And I see some of the same color there between Hawaii and the United States, California. Are those two tied together? Is that important to have those similarities?

[Roemer] Well, we have at Nino 1.2, there's four different regions along the equator that dictate whether we have an El Nino or not. And El Nino, 1.2, as you can see around Peru and off the coast of South America, is cooling as it expands further for the West, that would increase the likelihood of La Nina, as you see, to the east of Australia. El Nino region is still relatively warm and that and something we'd call a kind of positive global angular momentum. We're not going to go too quickly, but it has to do with the scatter sort of like putting our hands close together and spinning very, very quickly. Positive blam, acceleration, positive global angling momentum is a signal that El Nino is still holding on slightly and also because of the warming you see to the east of Australia. So until the cooling moves further to the west from Peru and global angular momentum talk begins to weaken. We still have occasional weak El Nino conditions and as a result, this may salvage any real drought potential for Midwest corn and soybean farmers this summer. As long as we have kind of neutral to weak El Nino conditions.

[Yeager] Let's move now into your next this is your June history. Rainfall trends with weakening El Nino towards La Nina. Okay. What is the dip? What are the reasons here for drier June weather? You say drier June weather should benefit corn and soybean planting. Do you still stand by that?

[Roemer] I think so. I mean, we have more severe weather here over the next 5 to 10 days coming into parts of the Midwest and the hopefully the tornado season will begin to weaken a little bit here in a couple of weeks. I think we're seeing some shifts in the jet stream pattern that will bring about after about the fourth or 5th of June, a week or two of much needed drier weather. Obviously, like in the great floods in Iowa in 1993 and the planting delays of 2008, we had a disaster on our hands along the Mississippi River and in the Missouri River areas with incredibly bull markets and corn and beans. I don't see June being anywhere close to that. Sometimes during weak El Nino events, see the severe weather and flooding exist through the month of June. Obviously, we have to dry out. So with the drought breaking and then maybe two weeks or so of great planting weather by early to mid-June, I think that will eventually be Berry's new crop of corn and soybeans.

[Yeager] But don't you think that there's that possibility that we get too late for the corn if we get too far into June, if that window opens for planting?

[Roemer] Yeah, it's getting a little bit late right now, but it seems to me the farmers are getting into the fields over maybe 70 to 75% of the Corn Belt pretty easily in with these off and on thunderstorms right now. So, you know, for soybeans, certainly that's going to be a great time window of the plant in two or three weeks. Corn It may be a little bit late, but we're not really that far behind nationally as far as corn planting goes at all. So I don't think it's really going to be a major issue just with some spotty locations that have seen unfortunately, yes, in parts of Iowa, Missouri and Illinois, some severe weather and flooding. Hopefully the 2 to 4 day windows to allow planting to resume here over the next couple of weeks.

[Yeager] I have to tell you, though, James, what's in and up looks very good in the limited windshield tour that I have seen this year. So if you were one of those that got it in pretty early in in April, you're welcoming this shower at this opportunity. Oh, at this moment, at this point of the the crop.

[Roemer] Yeah. And of course, with the new hybrids and technology over the last number of years, look what happened last summer in the midst of a drought, we still had above normal yields. So we had timely rains in July that I predicted quite early and hopefully, you know, that's going to continue. Typically the real bad Midwestern drought, you know, 2011, 2012, 83, 88, the bull markets in the summer and yields dropping 10 to 20% below trend line happened during not all, but at least a third of the half La Nina events. So everyone is talking about La Nina because of that warming I just mentioned a few minutes ago east of Australia, there's still lingering El Nino conditions. Hopefully that's not going to cool off that quickly and allow again, occasional El Nino conditions to persist and a decent summer crop for Midwestern corn and soybean farmers.

[Yeager] Looking at now, we have this, again, in European. This is the Europe Russia weather trends when El Nino is transition into La Nina, you've got three charts here or three maps, rainfall trends, jetstream, pattern temperature trends. How far of a departure is this from normal? Is that illustrated here?

[Roemer] Well, the big red area, that blocking ridge you see in the middle map, that tends to occur with almost two thirds of weakening El Nino. The transition to La Nina by the summer or fall. And that blocking ridge is going to continue here for at least another 1 to 2 weeks. Now, if it expands further east into June and July to June, July into the spring wheat areas of Russia, then we have a real major situation on our hand like 2010 and a potential explosive wheat market well beyond just the month of May. And that I'm still studying right now. But generally with weakening El Nino events, you see dry weather there and above normal temperatures. And that's still a concern right now for Ukraine and western Russia. I'm not quite sure about the Springwood areas just yet and what may happen. I'll be looking at this more closely in the next few weeks.

[Yeager] Okay, this is hypothetical. Back me off. If I'm too close or something, what happens if some of these trends continue and is it potential to lose a third of the Russian crop due to these conditions?

[Roemer] Well, it's certainly possible, Paul. That's a good question. You know, and again, with the war going on in Ukraine, you know, I don't really know the ability the farmers have to harvest a decent crop anyway. Right? So this is certainly an unknown territory, having a drought over 20 or 30% of the Russian wheat areas and Ukraine, about 50% of the region, at least following a frost and a war going on. This is an unprecedented situation that, you know, potentially could really tighten the global balance for sure if this continues.

[Yeager] And if it is again, just using that one-third as a potential, what does that translate to global stocks and global production and what does that mean for other countries?

[Roemer] Yeah, so I think we already have, I think, the lowest wheat stocks in about, I don't know, 12 to 16 years. So with Russia and Ukraine being the top, what, second, third, fourth biggest producers in the world, you know, obviously a 10 to 20% reduction in their crop would lower the supply situation by probably at least 5%. And that, you know, that maybe we could go to eight or $9 over the course of the summer. It's possible. But I do think you'll see the corn and soybean market which again this past week a separate itself if the weather improves separate itself from the wheat market. If the weather improves going into June-July for Midwest corn and soybean crops.

[Yeager] And that's the next slide I needed to get to. I apologize for being a little slow on that poll there. But I guess your question is highlighted here in yellow. How will U.S. weather impact psychology? Let's flip over to December corn in November. Beans behind you, James, is a chart of December corn that you were talking about earlier. But explain to me, these three maps, it's percent of normal rainfall over the late part of May into June, and then moving ahead. You talked about windows earlier. What do you see here in these patterns and what producers should be paying attention to?

[Roemer] Well, you know, it was sort of bullish corn of beans a few weeks ago because this incredible flooding in South America in rear ground, the soil and also the dryness, the second corn crop in Parana. But demand has been so poor that the really the South American weather hasn't been enough of a factor to really create a major bull market. But this mess, it's pretty much show that as we go into, you know, June and July and El Nino begins to weaken a little bit further, as long as there's not a La Nina situation and we have a dry June for the end of planting for corn and soybean planting and a decent, you know, moisture, this July and August will probably go into a bear market in corn and beans, perhaps down to $4 or lower in the summer, corn to be ten bucks for ten and a half in November. Soybeans, of course, the China equations are always key. What's going to happen with their crops, what's going to happen with their poor economy right now. So there are a lot of factors. I try to watch a bellwether to figure out, you know, what prices will do, not just the weather of course.

[Yeager] I asked this on the TV show every once in a while. Are we in a weather market right now and it comes to corn and beans?

[Roemer] It's been confusing. Yes, we are. I mean, we did see old crop corn and beans try to rally here somewhat, particularly soybeans on the South American problems in the last few weeks. But the demand situation, as I mentioned, is kind of horrendous, unfortunately. And we're beginning to see December corn in November, soybeans begin to top out, I think, because of the forecast for dry weather in June and the drought breaking in the Midwest.

[Yeager] Okay, fair enough. I mean, that's back to this slide again of drier June weather should benefit corn and soybean planting and continue to hurt dry June could hurt that wheat crop there but this is probably the thing that's hurt me the most is this photo of you with the big glasses. Sorry.

[Roemer] Yeah. Where did they go?

[Yeager] Oh.

[Roemer] Yeah. Well, yeah, we could see that. The bottom picture, you know, that the drought breaking where you see red in the top picture in Iowa, you know, we had a really warm winter once again below normal snowfall. The drought pretty much continuing, really the last couple years, even though, you know, yields were above trend line last year, which was incredible. But you can see the bottom map over the last 2 to 4 weeks, unfortunately, with severe weather. That red area in Iowa, parts of Minnesota and the western Corn Belt has pretty much eased. Now it's white, it's normal. And that's why a dry June, if we have it, won't be a concern to the corn and soybean market. We have enough subsoil moisture right now. It's just going to let us have early germination and finish up corn and soybean planting next month.

[Yeager] I talked to a farmer over the weekend and he told me that the rain and the waves, even though it's been heavy, 1 to 2 inches at times since the subsoil in Iowa was so dry coming into it that that rain was allowed to just go down and the roots went down with it and it just kept going down because otherwise those roots might not have gone down very deep if if it kept hitting dry dirt. Right. Roots don't go down in dry dirt. If it doesn't, it's not finding moisture.

[Roemer] That's right. So I think right now the moisture hasn't happened. Just all of a sudden, I think it's been over the course of the last 4 to 6 weeks, we've seen all finance chances for rain and as a result, this is definitely beneficial. It could result in a pretty good crop this summer.

[Yeager] One thing about the map before I flip to the next slide is looking at California. Almost the entire state has been out of drought in these two slides that the April 9th, the May 23rd. No drought in an area that's been then heavy in drought. But then I also want to point to the big changes in Minnesota and Wisconsin. And again, you mentioned Iowa, but New Mexico is still dry. Arizona is still dry. But really look at the eastern two thirds of Oklahoma out of drought. Kansas, eastern probably we'll just say one fourth, maybe one third. And then Missouri is looking good. So overall, a lot of areas greatly improved here.

[Roemer] Yeah. And as I mentioned before, the incredible snows in California, the severe weather, the flooding this winter, you know, that usually translates to a relatively active tornado season and above normal moisture in parts of the eastern Plains and Midwest. And that's what pretty much happened over the last 4 to 6 weeks.

[Yeager] A few of your weather headlines. We talked about the active I mentioned Greenfield off the top. I think what I've written the last couple of weeks about the weather comparison is that we're the the least amount of drought in the United States since 2020 derecho year. But just not so much. I think Iowa was leading in number of tornadoes after the Greenfield tornado. I don't know if anybody overtook them up to date. 2024 to date. Sorry, I should explain myself there. But are we in a more average or above average season as a whole? Here you've got some 1974 and ‘23 stats here on the screen now.

[Roemer] Yeah. So we're definitely, you know, one of the most active seasons. And I should point out, thanks for bringing that up, Paul. 1974 was actually a pretty strong La Nina. And after kind of a wet spring, we had one of the worst droughts, you know, of the century, like in the mid thirties, the fifties and certainly the 83 and 2011 drought. So that was a La Nina event. If we had a La Nina conditions right now, I'd be really concerned that whenever a hot, dry summer so 74 may be an anomaly, hopefully that's not going to happen. Most of these active tornado seasons, again, this is probably one of the highest in history in Iowa. I think if you go back and look at the top six or seven, I think five out of seven had above normal trend line yields for corn and soybeans only to 74. And I think 83 was very active, too. And that created a drought in the Midwest as well. So I try to make these correlations between tell the connections, sea ice, La Nina, El Nino, weather weirdos. I call them strange weather events like the historical snows in California. The record tornado season. And I try to look at different analogs and make these projections sometimes up to six months in advance.

[Yeager] Well, you have ‘23 and ‘28 mentioned here. And in 2011, a high active period with destructive tornadoes across multiple states. That was La Nina and the neutral year of 2019 continuous and frequent tornado activity, particularly in May and June, impacting the Midwest significantly. If I could just say one thing about this, the old Elwyn Taylor used to say that we go in patterns of years, 10 to 14 years of patterns, the number to take out 1974 out of this discussion. James, 2003 to 2024 last time my math it's 21 years were outside of a weather active weather pattern. But if you go a little more, let's say even 2011, it fits into that 12 to 14 year period. So I'm not asking if this is climate change. I'm just saying, is this just part of a more active pattern that we're in right now?

[Roemer] Yeah, I do believe someone in cycles, certainly. And Shawn's an expert in that, you know. I know he'll be your guest soon, too. Yeah. You know, the solar activity right now, the incredibly active sun, these cycles of over 11 to 22 years, all these do place truly into the weather. And it's something we need to watch. You know, there is some concern 23 that is one of my analog years of the summer was relatively good for the Corn Belt. I think we ended up having kind of a hot, dry August. So it's possible, even though expecting decent corn and soybean crops, if you look strictly at these cycles, if you look at 2003 as being one of the potential analog years, maybe August, out of all these months coming up, could be the one that's the most concern for the soybean crop, possibly with a hot, dry August like in ‘23. July should be good.

[Yeager] And that's what you also say here in this slide of July. Temperatures and rainfall trends. And that hot cool is kind of right there in the Middle East where I'm sitting. But seated. But the western U.S. looks hot, which we've, of course, seen that some ridiculously high hot weather in California, in Arizona and Nevada over the last few years. And then again, we kind of talk about I'm going to fly through here because, James, I know I'm up against your clock and you've got December corn futures high. And I guess if you want to look at some you've got a star here in the bottom of 2024. And are you looking at that? Yeah. Is it going to follow the pattern? Is there any pattern that we can look at for guidance right now?

[Roemer] Well, I think I'd look at one of the good analog years. Weakening El Nino is like 2016, like 2003, 2003 had much more of a severe weather threat like this season in the Midwest. And, you know, that is about, what, 22 years, approximately the 22 year cycle with the sunspots and all that would suggest passive Billy. You know, a hot, dry August that's going to be questionable right now. I'm going to be monitoring the El Nino and La Nina very quickly. If Nina forms more suddenly by July and August, then I think we're going to be in for some concern for the soybean crop in August. But right now, I'm keeping an optimistic view that overall we're going to have generally a decent summer doesn't mean we won't have a few weather scares here and there. We always do. But for the most part, I'm expecting, particularly for corn above normal yields this summer.

[Yeager] And I did flip to your last chart here of just kind of laying out when we had some delays and when some things were up and down. But historically, right now we're at least over the last five years, this chart on the left of the screen, December 19 Corn, we're still right now in 2024, were above what we were on that 19 chart at this time. So historically, we're higher to start with, right?

[Roemer] Yeah. Yes, we are. You know, obviously with inflation and, you know, some of the South American weather problems we've had over the last few months. But I mean, obviously to go down to $3 in corn, that's not going to happen any time soon. You know, with inflation and with Nina forming. Right. It may not happen this summer. And that would be good news for the grain crops in the Midwest. But it should happen by the fall. And if it does, that will open the door for problems in Argentina next winter in their summer. So if we do have a bear market in corn and beans in the spring and summer, we have the opportunity for a big bull market next winter there summer because of La Nina and South American crop problems.

[Yeager] Yeah, we didn't even get into South America's issues. That'll have to be when you come back again.

[Roemer] All right, look forward to that.

[Yeager] All right, real quick, James, before we go, headline, give me two headlines from this that we should take away from what you're telling us.

[Roemer] Drier June weather, good news for the soybean planting and also for corn germination. Perhaps a bear market are still concerned about the Russian wheat situation and doubt we're going to go into a longer term bear market of wheat any time soon.

[Yeager] James Roemer, Best Weather Inc, so good to see you again, my friend.

[Roemer] Love it. I want to come out to Iowa, been saying that for five years, lived there for about 12 years in Des Moines.

[Yeager] You know, we took Shawn Hackett to the state fair last year, the Iowa State Fair. He actually brought his family up and experienced it. So just saying, end of August, it's beautiful. You can wear the weather on you and feel like you're back in Florida in August. In Iowa.

[Roemer] I wish it was in September, October, during like Octoberfest, but maybe I'll try to make it out there. But we'll see this year, maybe next year.

[Yeager] There you go. I'm Paul Yeager. This has been the MtoM Show podcast, a production of Iowa PBS in the Market to Market TV Show. This episode is produced by me, Paul Yeager, executive producer, is David Miller. Our sound technicians are Sean Ingrassia, David Feingold and Kevin Rivers. We'll see you next time. Thanks for watching. Bye bye.

Contact: Paul.Yeager@IowaPBS.org